I know people can have different opinions, but I am interested in the thoughts this group.
Are you trying to minimize the loans your child is taking out for undergrad as much as possible? Taking it to extreme of the child starting at community college.
Are you limiting the loan amounts to the standard federal levels per year?
Are you willing to take out parent loans in addition to the normal loans?
I understand what degree and what school can play a role in this.
We decided what we were willing to contribute to our kids education. Our contribution would be from savings, current earnings and loans we were willing to take out (we considered them our loans not our kids). We considered Stafford loans part of their contribution if they needed it along with money they earned, grants and scholarships. If the school was affordable after all was considered then it was a school they could consider, if not then it was off the table.
for undergrad in particular, i think they should be avoided if at all possible. I know it varies by state but, here in CA, you can get through a CC and CSU and earn a very credible BS/BA by working part time.
Those Plus loans in particular will haunt you as you are heading into retirement - IMHO, everyone should steer clear of those. If you need them, another school is probably a better fit. There are other ways to get there.
We told our daughter we could only send her to a school we could afford. We told her what the number was. We refused to take out any loans and we didnât let her take any loans either. Didnât want that monkey on the back for any of us, especially since she wants to enter a career that does not pay well.
My views on this have evolved. With my D20, I was adamant - no loans of any sort. I didnât want her saddled with any debt and I didnât want to commit to giving her something (us taking responsibility for educational debt) that I wasnât sure Iâd be able to offer her younger sister, when the time came. That did guide where she applied and is currently attending (lucky for herâand usâthe school she has ended up at a school that is perfect for her). Now as we are starting to think about D24âs options, I am definitely open to her taking out stafford loans, if needed, and potentially ok with us borrowing the same amount ($27k) on top of that, if it would bridge a gap and make a desired school financially feasible. If her educational debt was limited to just the stafford, we (parents) would take responsibility for repaying. If we needed to borrow on top of stafford, weâd require her to be responsible for stafford and we could cover the private loans.
It is such an advantage to start out âadultâ life debt-free.
My spouse was able to do that. I was not.
We are trying to give our kids the gift of debt-free undergrad and are fortunate to be in a position to do it.
In almost every case, if there is a 4-year school that is a debt-free option and one that requires loans, I would advocate for the debt-free option. If there is no way to avoid loans, I would advocate for the choice that allows you to minimize them the most.
Outside of a top-5 school, I donât think the advantages of prestige, reputation, etc. outweigh the disadvantages of a significant debt burden.
We let our kids take the federal loans since those are the equivalent of buying a new car, so not too difficult to pay off.
We took some parent loans for two of them - not difficult for us to pay off either.
For two of mine their âloanâ difference allowed them to go to college, period. For the other it allowed him to go to a much better school. For the two we took loans for it allowed them to go to a better school.
No regrets.
Our budget is small and I would have been okay with them taking out a little bit, maybe 4 digits, if needed. Really hoped it wouldnât have to go beyond that. Turns out none are needed, so even better.
If starting at cc is âextremeâ, DDâ17 took it another step further and only went to cc, for a 5 semester program, basically trade school. That was what she wanted and it is serving her career fine. I know that doesnât work for everyone. She worked a lot during school.
For DDâ19 with different needs and desires we took the steps of finding a regional public at which she would be in the top automatic merit. I thought she might have to take a little out, but she was helped by Covid refund, CARES Act, Stimulus, and a very well paying Summer 2020 job. She has not had to work during the school year until this one. She also had enough dual enrollment to graduate early. I had suggested she could take a little loan here at the end for short term study abroad but at this point she is determined to make it for bragging rights, so she will use savings for that if they do get to go (and have some left).
So yes, we took some fairly big steps for them to be debt free with minimal parental contribution. My kids were not interested in prestige, just getting what they needed and have some fun along they way. They are not/will not be starting with big salaries, but with no student debt, itâs fine. We live in the Midwest where things are cheaper too!
I agree. My wife and I had debt many moons ago. It limited what we could do. We had to go make money.
D19 worked hard and got 95% of tuition and fees paid via scholarship at a school in the Top 100. We are able to cover the rest.
Just need D23 to get similar scholarship and we will be in business and can be done.
We had a set amount we could contribute- anything over would be student loans. We would not take out any loans. Our oldest was between 2 schools and picked the one that requires him to be in debt about $20000 when he graduates. The youngest is going to a school where he will have no debt.
I think both made the right decision.
We told our kids we would send them to college w/o loans. We are in North Carolina and there are plenty of good state publics that they could go to. One is working and doing some community college and the other will be attending a small private college with good merit. No loans for anybody.
ETA: to be clear we are not made of money and would not be paying $60-70k a year anywhere. Those schools were off the table from the get go. We had a budget and only looked at schools we could afford, but w/o loans. We also live our life w/o loans (paid cash for our last 5 cars). We do have a smidgen left on our mortgage, but pay our credit card off every month and live pretty modestly. We are fortunate to be in a place where we can pay $20-30K a year for college, but we are fairly frugal in general.
I had to change my mind while my kids were in school. At first, I had a âno loansâ position. For their second years, they took only the subsidized loans. One child only took the subsidized loans for all 3 years so ended up with about $15k in loans. The other took the subsidized loans but also had to take the extra $2k, so ended up with about $22k in loans.
They didnât take the loans because I wanted them to have âskin in the gameâ or to teach them about borrowing, but because they needed the money at the time. Thankful for the program.
They knew I would not be taking parent loans of any type or guarantying their loans and chose their schools with that understanding.
The one with $15k has no problem paying them back (engineer). The other one did struggle paying them at first and was very thankful for the covid reprieve. She has since returned to school. Sheâs not taking any loans for grad school as she knows how much she has to pay per month (about $250!) and itâs tough.
I had a no loan - student or parent - policy for my DD. DD took a full ride and I gifted her the 4-year cost of our in-state flagship. If she goes to grad school and doesnât get a scholarship or sponsorship from her firm, Iâll pay cash.
Exactly.
As an example, one daughter right after graduating took a âdream jobâ that paid rather badly. She could only take the job because she graduated with no debt. This led to a second job, and both of these helped a great deal in helping her to get accepted to a very good DVM program (where she is studying right now).
The parentâs age, the parentâs potential earnings, and the studentâs likely major might impact this a bit. However, being cautious about debt is a good choice and can open up more options in the future.
No debt for either student or parent; we determined a budget for D20 and she came in below budget with her school of choice. Weâve been lucky income wise and lived frugally to save that budget - not going to change our minds about debt now.
For D23 and D24, we have adjusted the budget a bit to take inflation into account but again have a no debt policy. As others have said, being able to graduate debt free gives so many more options.
I graduated with debt and that debt controlled my career and our family life choices for way longer than I ever want for my children. There is no school, in my opinion, worth going into debt especially since there are so many decent, good and very good schools out there.
I agree to a point. Understand that sometimes loans are necessary for some students to go to college at all. Other parents also live frugally and save and do their best, but a loan may still be necessary.
Starting out debt free is obviously best, but not always possible.
1 and 2. Yes we tried to limit loans out kids took out. But it improved our cash flow while they were in college so they took the Direct Loans (not always the full amount). We paid ff all undergrad loans as graduation present.
Our kids did not go to Community College, but if that had been the only affordable option, it would have been on the table.
We also would not have tapped into our retirement funds for college costs.
A 4-yr on-campus experience would not be possible for my S20 without DSLoans. His options were either live at home for 2 years, start at community college, transfer to a local 4yr public and live at home for 2 more years while he completed his BS ⊠or take out DSLoans and attend a 4-yr college while living on campus. He and I agree it would be better to do the latter.
He will take the maximum DSLoans each year and end up with approximately $27K in debt. Unless I come into an unlikely windfall, he will be responsible for repaying his loans as I have two younger children to put through college.
He will not take out any other loans. I will not take out any loans.
My understanding on this thread was that our answers were supposed to be about our own child, not others. My views on debt solely pertain to me and mine; if others make other choices - I am going to assume they made choices based on their own circumstances and views.
Basically, if other families choose to take on debt, cool.
Edited to Add: From reading CC for years, I also think the list of colleges my children have had and will have as schools that fit their interests and budget are schools many on this board would never look at once, let alone twice. We are definitely looking for the âunderrated gemsâ that donât get a lot of love here.
I apologize - I was just responding as such because you gave the opinion that overall, no school was worth going into debt for.