<p>My favorite boards in CC is the financial aid board. Once in a while in the FA board you get students asking if it's okay to take out 20K, 30K, 40K, and even 80K loans. Parents do their jobs by telling the students horror stories of being stuck with loans and not being able to buy the house until their late 30's, thus steering away students from making such poor decisions. However, loans are still a part of financial aid and many students do take out loans. </p>
<p>What bothers me is that many parents agree with financial calculators and say that you must earn X amount to "comfortably" pay the loan away. </p>
<p>Why should loan payback be comfortable?</p>
<p>To give the lenders more money over time?
To get immediate gratification of a high, post-college income?
To stretch out payment for longer time so you will pay less each month?</p>
<p>I feel that this attitude of comfort is doing the students more harm than good.
I feel as if parents who cosign loans or tell their offspring to take out loans for their 4 year adventure at Dream University are not stressing to payback loans ASAP.</p>
<p>There is no "Frugal Living" board or topic in CC to help students pay off their loans or help parents cut costs so that they could better fund their offspring's education. I will start by putting down some common sense things that one can do: </p>
<p>Pay more than 10% or 15% of your income. Pay more than the minimum, you will save plenty of money on interests rates that you can use later.</p>
<p>Look for places to cut money at:
Gadgets (You don't need the latest thing)
Clothing (Stay fit and you wouldnt need to get a new size)
Transportation (Buy used instead of new)
Housing (It's okay to live with your parents or with a roommate)
Food (Cook instead of eating out)</p>
<p>Avoid additional debt such as credit card debt.</p>
<p>Work extra hours if possible.</p>
<p>College grads shouldn't be entitled when tehy are in debt.</p>
<p>I disagree with the pay back ASAP plan when the student has a good job and future. I did that and should have lived less frugally back then. One thing you can never replace is time- it does you no good to sit with a pile of money at 50 and look back at numerous opportunities missed due to scrimping instead of taking vacations when you had your youth, health and no family obligations. I should also have borrowed more to afford more books during college and medical school. There is a huge difference between living lavishly and frugally- the middle road is best.</p>
<p>We just had a very long involved thread in Parent cafe on frugal living in NYC of all places, in which we discussed roommates, neighborhoods, taking lunch to work, the cheapest grocery stores, the cheapest foods, etc, etc.</p>
<p>There are also other boards devoted to frugal living.</p>
<p>IMO, more high schools need to require courses in Personal Finance. Kids need to understand all about consumer debt and banking regulations, as well as the power of compound interest. We have taught our kids how to budget, how to live within their means, to pay cash, how to save, etc. My D has taken out Stafford loans and realizes that it is her obligation to pay it back.</p>
<p>I had this talk with my kids when they took out loans. Son1 is almost done paying off his loans. He poored most of his income into getting them paid off and he graduated in May of 2010. He will be debt free for the new year and will save for his living expenses for grad school. One year of work and his loans paid off and grad school living expenses will be covered.</p>
<p>Let me add that he lived at home so he could do this.</p>
<p>I am not a believer in students taking out loans,IF the parents can afford to pay the costs.Having them “vested” in their educations with stafford loans,etc,in my opinion is not a real enticement to stay in school and get good grades…Graduating with 20k+ debt is a noose around their necks for quite awhile…We have nieces and nephews who are saddled with more debt then that, and can barely afford to “live” after graduating , 4 years ago.Granted they live in a costly part of the country,NYC area,but nevertheless.</p>
<p>Parents should not stop contributing to retirement accounts to do so,but if it means a few less dinners or a less costly vacation,i think it is well worth it…JMHO</p>
<p>I think there can be some sort of happy medium here. By all means pay back those loans sooner. We switched our mortgage to a 20 year one from 30 years for example. But I also agree you shouldn’t miss out completely in having fun while you are young. For example when traveling, we used to (still do really) stay in cheap hotels, but eat at very fancy restaurants. Even now we rarely travel unless it can be tacked onto a business trip.</p>
<p>megpmom: Missouri now does require a one-semester Personal Finance class in order to graduate from high school. Law went into effect two years ago. Our son took it second semester of junior year. He had several seniors in his class who were on their third attempt to pass in order to graduate!</p>
<p>Good for Missouri (my birthplace!). Texas requires Economics, but when my D took it, the curriculum was mostly macroeconomics and very little personal finance.</p>
<p>I dont’ want to sound like an old codger with “kids today”…but really, kids today don’t know how to live frugally. They assume the money is there to eat out often, go to shows, and so forth. I am amazed at how much better my kids live than I did. Maybe it’s because they don’t have loans–well, my kids don’t, but some of their friends do, and they’re all living in the same fashion…eating out on a whim, going to see Cirque du Soleil, and so forth. This is money that they will wish they had later when they are trying to pay back loans, and/or pay a mortgage and raise a family. When I was in college, we knew how to cook and hardly EVER ate out, unless it was somebody’s birthday. And a fun evening was the cheap movie on campus (if I say how cheap you will be able to calculate my age. Pre-inflation of the late 70s, ok?)</p>
<p>Not that you shouldn’t have fun, but you can have fun on a shoestring budget.</p>
<p>Re paying back loans early–my H did not pay them off early because by then interest rates were sky high and his loans were cheap. He reasoned that it was better for him to have the money. :)</p>
<p>Reasonable loans are doable if the kid lives at home otherwise and they graduate making a good income. Son 2 will have a good ammount of his loans paid off because he has been working full time while in school. He too will live at home for about a year. My kids are loan adverse because they grew up knowing how hard it is to pay them back when there is a set back.</p>
<p>Son3 will be living in Qatar or Saudi and make enough to pay them off within the year. My daughter on the other hand is about to incure more debt while pursuing a career that she may or may not gain employment for a few years. BIG MISTAKE but she wants to live with friends instead of saving the moneyfrom her jobs so she could graduate debt free paying off her first years debt. I wont pay rent for a school that is commutable.</p>
<p>The “national conversation” for at least two years has been all about the pitfalls of debt and the need to “live within our means,” both individually and collectively.</p>
<p>Teaching children to “live within their means” while launching them into adulthood with a boatload of debt on their shoulders is akin to teaching them to look both ways while shoving them in front of the bus.</p>