<p>Our son has some acceptance letters and some financial aid package letters. One of his Grandmothers says she can help with what's left over. We'll have to take out loans to cover the rest. This all affects where we can decide he can go, and if there is more than one we find "affordable" then the choice is his. But we have some problems.</p>
<ul>
<li>Grandma can't commit to a $$ number. And the things she says are all over the place and inconsistent. </li>
<li>We have no idea how much we can or should borrow.</li>
</ul>
<p>State school aside, it looks like we have $27K to come up with between Grandma and loans</p>
<p>My wife blindly thinks everything will be OK and work itself out but I know we have to figure out financing now in order to pick a school and send a deposit in just a few weeks (May 1st). I'm just so clueless as to what to do next!</p>
<p>You make a little chart with two (not more) colleges on it. You outline total cost, then you do the analysis which shows how much you are paying out of current earnings and savings. You show how much your son will be covering from his summer job and work/study or during the year work. You show what’s left and ask, “if you can commit to funding this amount for four years, S will accept this offer of admissions. If not, we need to make a decision based on what we can realistically afford”.</p>
<p>Are you planning on 27K in loans times four years if Grandma bails or can’t come up with the money? if not, walk away. If she sends your son 1500 over the summer that will be a fantastic addition to his book/lab fee fund, but you can’t count on something which is all over the place and inconsistent.</p>
<p>I agree with Blossom. If you can get Grandma to set up a 529 and she can put what she likes in it. But if she’s waffling, I think you should assume the contribution is zero.</p>
<p>A financing plan that relies on Grandma not needing long-term care is probably not a financing plan, particularly since it sounds like she’s a sweet lady but has no idea how much “what’s left over” is likely to amount to.</p>
<p>First, does Grandma have a realistic idea of what college costs today? Is she aware of the numbers you have in front of you? You may be thinking she can afford something more substantial and she may be thinking of a small amount she would assume would go much further than it actually would… It’s time for a serious sit-down. Have all the numbers in front of you for the two or three top choices and for the two least expensive that your S would be happy to attend. Show her the numbers, explain the payments left, your loan options, and ask her to commit or not… I think you need her to transfer the money to an account to be used only for your S’s college costs. If she continues to waver, assume she will contribute nothing and if, sometime in the future, she does give you money, put it aside to reduce the loan amounts. Good luck!</p>
<p>Does Grandma really understand today’s college cost? I ask because during a recent conversation with my own mother, she spoke of California relatives having the benefit of free college tuition. She was shocked when I told her those days were long gone! </p>
<p>Unless grandparents are unusually secure financially, their monetary situation can change in an eyeblink. A stroke or heart attack, broken hip, complications from diabetes, etc. can all lead to a need for assisted living, skilled nursing, or extensive in-home care. For that reason, unless Grandma specifies what her contribution will be and how sure she is that she can provide it over 4 years, I would consider anything from her to be a nice bonus - not something to count on. Is this your mom or your wife’s, OP? Grandma’s child should raise this with her.</p>
<p>This is not an uncommon post at this time of year… grandparents often offer without realizing the true cost. I would not commit to any school you can’t cover without her help. Also, are you aware that Grandma’s contribution will be considered in his financial aid package after the first year? He has to report if she pays some of his college expenses freshman year, and sophomore year aid is likely to be reduced. </p>
<p>One way to handle this is to have Grandma open a 529 and put money in it that is not used until Junior’s senior year of college.</p>
<p>Do be aware that college costs are at least X4. My one son’s close friend got all sorts of help and encouragement when he was accepted to NYC and Grandpa generously offered to pay up any gaps that the family might have. Said right out in public at the high school graduation party. And he did pay freshman year. No idea how much, but kid lived in NYU dorms and all was well and good.</p>
<p>Well, he was at home, commuting and life was pretty tough the second year. He had to sit out second semester third year and use all of the student Direct loans for the second term as well as what he earned during that semester at home when he worked, and then took summer school courses, was fighting with the school for every single course and credit to apply towards graduation, and it was very difficult for him to get his degree. He owes big time loans. Far more than the Direct Loan totals, and those were no small things at those interest rates when he took them unsubsidized and not paying on them until recently had made them staggering amounts. His sisters ended up going to local schools on scholarships and to a SUNY. That first experience really hurt financially. Grandpa, though well to do, started going a bit off and then getting any money from him was problematic. It was not a good situation.</p>
<p>That said, what I recommend, as Blossom has so neatly said, and reiterate and expand, write down what the bottom line costs for each school will be after the grants. Don’t add loans or work study to confuse the picture as those are really out of pocket amounts that are payable in the future and/or can be earned maybe. Look at those bottom lines and determine what is available by borrowing–Student can borrow $5500 freshman year and it increases each year a bit, but so do costs, remember. IMO, Grandmom’s amounts should save you from borrowing, not in addition. No guarantee she’ll pay it–I’ve seen grandmoms and other such relatives choke when ti come to actually writing the check, stop after the first or subsequent years, or get ill, confused, or die, and then all bets are off. </p>
<p>My husband’s family were suspicious for years whether he got money, as they suspected he did (they were wrong) to pay for his private college. Don’t know if they still think that way, but they aggressively pursued this when their kids came of college age and grandma was pretty much senile. They were very disappointed to find out that not a penny went that direction, so that they could not insist on parity. A lot of family spats occur in such situations. </p>
<p>Grandma is my wife’s Mother. She has been the one having the discussions with her. I contribute sparingly to help clarify when they are not communicating. My parents are out of the question, my Mom says ask the other Grandmother for help, my Father says don’t worry but also says his first priority is taking care of him and my Mom. Grandma says we should take out loans and she will help pay them. Maybe that’s a way around her $help being recorded? My wife has been talking about her Mom doing a monthly payment plan with the school, but that would be recorded as help from family I guess huh? And affect financial aid next year … ?</p>
<p>Assume that Grandma’s contribution will be $0, so if anything shows up, it will be a pleasant surprise. Choose college accordingly, so that no more loans than the federal direct loans will be needed.</p>
<p>Oh, no… you do NOT want someone in retirement making payments on your kid’s loans. If they don’t have the excess cash now to help, the last thing you want is for them to commit longer term to making loan payments. I think you need to wade in (yes, I know, it is your wife’s family). Tell your wife that this discussion appears to be jeopardizing your in-laws retirement, and in spite of their good intentions, you can’t allow it. </p>
<p>27k is one thing, if you have the money available, cash on hand. (Times 4 years and no other kids to consider.) If you don’t have the money, the loans can eat you up in monthly repayment. You start paying on freshman Parent Plus loans in spring of freshman year. By the time you get to spring of senior year, it could be $1000/month on a PP loan. And a huge chunk of that is interest. </p>
<p>If you go with outside loans, finance freshman year, depending on your income and financial stability, you may not qualify for soph year loans.</p>
<p>My grndmother had a goodly amount of money socked away but (because?) she was incredibly frugal. I got $10 checks for my bday. If this is that kind of grandma she is going to be shocked even by the price of the state school. </p>
<p>Wow!! Is this right? Off the top of my head, I can think of at least three families whose kids qualify for some financial aid. The parents apply, get the discount, and then one or both sets of grandparents pick up the rest of the tuition tab. I thought they were getting around any kind of reporting by gifting the money each year. It was my understand that a person could gift 14k (28k for a couple) completely under the radar. </p>
<p>This is not a concern for my husband and me as the grandparents have no ability to contribute anything towards college, but now I’m curious.</p>
<p>There’s a difference between IRS and financial aid considerations. The colleges call it all “resources” available to pay for college. I suppose you can get around reporting it, if it’s all under the radar, but it’s is a huge chance to take that Grandma will come through with enough to make this affordable for the parents.</p>
<p>We took the PP loans, but knew exactly how we were going to pay them down. Our kids took the student loans- and, at this point, do not know how they will pay those. If you don;t have the money to actually make the loan payments, you are up the creek. </p>
<p>This is about more than freshman charges and paying off that one loan.</p>