<p>While the kids were growing up, H refused to save for their college, saying that any extra money should go against debt vehicles for jointly held assets with BIL. Now kid one is in college, kid two on the way there, and we need to borrow for their tuition/fees. There is borrowing room against some of the assets (real estate), but he doesn't want to borrow against property jointly owned by BIL. It seems like he would rather borrow at a higher rate (regardless of how much more we have to pay, even if it were $billion) than borrow against the joint properties. </p>
<p>Grrr....how to deal with H whose FIRST priority is someone else?</p>
<p>Does BIL have any kids of his own? Maybe it is time for all the adults to sit down together and talk about a strategy for dealing with the costs of educating the next generation.</p>
<p>Some folks prefer not to borrow against property they own. We are in that camp. We absolutely refused to fund college by borrowing against our property.</p>
<p>We did not have a college savings for our kids…MOST families do not have college savings for their kids. You are not alone.</p>
<p>Here is MY free advice…if your student needs to borrow in excess of the Stafford loans, and you are unable to help fund their education without additional debt, perhaps you should be considering a less expensive school.</p>
The interest rate on S’s parent PLUS loan is 7.9%. Not sure what we could get on equity loans, but it seems to me that it’s worth looking at. These would be loans instead of parent PLUS loans, not in addition to them.</p>
<p>xania, how much in loans are you anticipating taking out annually? My point is…if you this is a large amount, it doesn’t matter what the source of the loans is…you might want to look at the total financial picture. </p>
<p>Remember too, home equity lines are variable. Right now the interest is more favorable, but this could easily change during the duration of college or the repayment time.</p>
No and right now his financial objectives are somewhat different from ours.
I don’t think you are really seeing the bigger picture. A family with the amount of equity we currently have should not have to send their kid(s) to community college because that’s all the ready cash they can come up with on a day to day basis. What good is it if we can’t use it?</p>
<p>Only you and your husband can sort this one out. If it is clear to you that the issues are more than just financial, then get some help with those issues so that you can then approach the financial ones. One thing that I would suggest you consider, is to look at what you can pay out of pocket if you cut everything (including further real estate investment) to the bone. There may be more money available than you had thought. Or, maybe there isn’t. If a bit more money is available, take a look at how long it will be for you to get the parent loans paid off. Perhaps your husband is more comfortable with living on a tight family budget for the next X years, than he is with putting the property at risk. Remember, even if you borrow against the property, those loans still need to be paid back. He may have looked at the difference in interest rates and decided that the risk is not worth saving Y amount in interest.</p>
<p>Do you have equity in your primary residence? Is that a property in your name only? If so, get your home equity loan using that property and leave the co-owned properties alone.</p>
<p>I guess what <em>I</em> am saying is that your family should certainly determine your own debt ratio. BUT I personally would not allow my kids to go into debt (even with loans in MY NAME) for more than the Stafford loan amounts. If you take $100,000 in loans, someone is going to be strapped with payments of AT LEAST $1000 a month for at least 10 years. I don’t think I ever mentioned a community college (although many successful folks startd out at CC’s and completed degrees at a four year school…to save money). What I suggested was to look at your finances and try to keep your debt to a minimum.</p>
<p>That being said, many folks are willing to take out loans to totally fund a private school education for their kids. This is a personal family decision…and if it’s what you want to do, that is your family’s decision.</p>
<p>We’re going to start with trying to increase the home equity line on our own home. Not sure how much room there is at this point. </p>
<p>
This is how I see it: if we had put X money in savings accounts for the past 20 years, you would say well, now you should spend that money. If we had, say, bought stocks and bonds, <em>you</em> would say now you should sell some and spend that money. But we put money and time into real estate investments. So now, we have basically 3 options </p>
<p>(1) sell some of the real estate and spend that money. No one wants to do this, as we would then no longer have that income-generating investment.</p>
<p>(2) just take what money we get from cashflow from the real estate and use that (fine, except that it isn’t available in large clumps such as one needs when tuition is due. And maybe not enough in one single year to pay for the total costs in that year (especially once D joins S at college). Get no benefit from the equity until the properties are sold.</p>
<p>(3) Borrow small amounts as needed to make the tuition payments and amortize over a slightly longer than the 6 years we expect to have undergrads. Still have the real estate as investments and income generators when we are done.</p>
<p>*) just take what money we get from cashflow from the real estate and use that (fine, except that it isn’t available in large clumps such as one needs when tuition is due. *</p>
<p>most schools will let you set up a monthly payment plan with no interest charges. So, you don’t need lump sum payments.</p>
<p>Agreed…we were “members” of Tuition Pay for seven years. We paid monthly for eleven months of the year. There was a modest annual sign up fee annually.</p>
What do you suggest if the cashflow isn’t enough to cover the total costs (along with our regular incomes, of course) within a given year? Aside from cheaper schools, that is. How best would you make the assets work for you?</p>
<p>Honestly, the way to fund a financial aid gap is really individual to each family. You have outlined the ways this can be done. You can take a Parent Plus Loan, you can take a HELOC on your primary residence. Some folks actually get additional jobs to fund this gap. What worked for our family might not work for yours. </p>
<p>In our family’s case, <em>I</em> worked a full time job and EVERY penny of it…all of it…went to pay college costs for the full time our two kids went to college. That is how our family dealt with the costs of college. The kids took the maximum Stafford loans, and also they worked to pay for ALL personal expenses including their books and school supplies. We did not want to use our home as collaterol for college loans (using a HELOC), and we did not want to take Parent Plus loans either. </p>
<p>Both of our kids went to expensive private universities…with one getting a somewhat decent merit award and the other getting a tiny one. </p>
<p>BUT that was OUR decision. </p>
<p>There are many folks who DO find that taking out loans for college works for them. I think the most important thing is that you and your husband agree on the loans.</p>
<p>To be honest, the interest costs won’t matter as much if you plan to pay off the loans ASAP even paying off some of them while your child is in college if you can. You are in a nice position in that you do have those (shared) real estate assets that you will continue to have even after your kids graduate from college. </p>
<p>So…sit down and have a talk wth your husband. The two of you will be cosigning or taking out these loans. As long as YOU two agree on what you are going to do, you will be fine.</p>
<p>One thing to remember, however. College is for FOUR years. Just feel comfortable that you will be able to take out these loans for all four years if needed. It is very sad when a family finds that they have exceeded their abillity to take additional loans when their child is a junior or senior in college. SO…just plan ahead.</p>