borrowing from family

Paying for College
1

<p>with an EFC of 18,000, between my daughter getting unsubsidized stafford and a perkins loan, it leaves us with about 14k in parent plus loan. </p>

<p>My in-laws have offered to let us borrow from them with a slightly better interest rate rather than through an institution. </p>

<p>Will this effect any financial aide going forward? </p>

<p>They are definitely not giving us the money.. loan only. I'm just fearful that because its from family that it will somehow be construed that the "family" can afford more of a contribution.
Thanks for any comments and info.</p>

2

<p>How would the college know that the money is borrowed from a family member? </p>

<p>To protect yourself and your in-laws, I would recommend writing up some sort of loan agreement with amounts, due dates, interest, etc. That will also go far in showing that this is a loan. Your in-laws assets will not be figured into the family contribution.</p>

3

<p>I would stay away from borrowing money from family members. A "slightly better" interest rate is not worth it!</p>

4

<p>We borrowed successfully from family for a mortgage. It depends on the family. In our case, we had a legal, filed document so we could deduct the interest, but you would not need that. You can print out a loan payment schedule based on the amount and interest rate, to have a record for you and your relatives. I agree you do not have to tell the college that you borrowed from family to pay your contribution. They are not going to ask where you got the money.</p>

5

<p>
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I would stay away from borrowing money from family members. A "slightly better" interest rate is not worth it!

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<p>Avoiding the usurious "loan origination fees", which can add up to 4% of the total loan amount, would make this arrangement worthy of consideration. However, one should carefully consider borrowing from family --- are you close, have you had a reasonable relationship in the past, etc, etc. Some sort of a written arrangement that spells out amount loaned, interest rate, and payment due dates is definitely a must have, unless you trust your inlaws unconditionally. I would borrow from mine or loan to them on a handshake without thinking twice.</p>