<p>. 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>This is a terrible idea all around. First of all OP- you have a responsibility to yourself and your wife, not to end up with a trashed credit score due to borrowing money you wouldn’t have borrowed were it not for promises from grandma to help you pay them back. Are you going to take your mother-in-law to court when she misses one of her payments?</p>
<p>Second of all, if your M-I-L cannot afford to write you a check for 5, 10, 15K right now, she will not be able to (or will not end up) covering her portion of the loans. I don’t care if her name is Sam Walton or Bill Gates. I have seen this scenario dozens of times. Grandma may be looking at a paid off mortgage and an IRA worth $750K and a brokerage account at Merrill Lynch for another $100K and feeling flush. Terrific. If so, she should write your son a graduation check for a nice sum and call it a day- or decide she wants to pay his FIRST SEMESTER’s tuition directly to the school (which means it is not subject to the IRS gift limit of 14K per person) and then call it a day.</p>
<p>You want to sue her estate to “recover” the subsequent promised payments if she dies next October (god forbid) and you’ve got 7 more semesters of tuition which you can’t afford to pay without her help? No you don’t. You want to tell her social worker after she’s broken a hip and needs a rehab center to recover that you need her to be in the state run facility, and not the private one around the corner from you, because she is making tuition payments and can’t afford both rehab/private nursing and tuition? No you don’t. Do you want your wife’s siblings (if she has) or their children suing YOU and claiming you exerted undue influence on a confused old lady and therefore got more than your “share” of grandma’s assets while she was alive, and therefore you should be disinherited?</p>
<p>This is such a bad idea. Show grandma the numbers on two private schools. If she pulls out her checkbook and says, “when do I pay” you have something to talk about. Any discussion of loans, payment plans, “down the road” generosity, you smile, thank her for her love for your son, and go back to making a decision based on your own resources. Anything she gifts to your son- that’s wonderful and will surely help with the “self help” component of his aid (either work study or his loans).</p>
<p>My parents bought a new home in order to accommodate my grandmother moving in with them. The agreement was for 83 yr old grand mom to pay $ 100 monthly towards the new mortgage.</p>
<p>Three years later grand mom fell in love, moved out and got married. This was back in 1964 and that $100 bucks was huge. </p>
<p>I’m another of the pay what YOU can afford and do NOT count on anyone else’s money, especially, take out a loan and I’ll help pay it back. When our kids were very young, we were chided by my sister’s BF for sending him to public school instead of private (S was extremely gifted). The BF said he’d help pay tuition, etc. Of course, we thanked him for his good thoughts and wishes but turned him down. He never mentioned it again and we never saw a penny, even when we did transfer S to a private HS (that was MUCH more expensive by then).</p>
<p>My Sis-IL never said anything but would periodically write generous checks when she could to help with the tuition for S and D, when they were in private HS and later in college. We never expected or counted on these funds, but it was really helpful. She had told us she’d help, and we thanked her for her kind thoughts but made sure to choose a school that we could afford (with some stretching), and were glad we did.</p>
<p>I agree that it’s important to count on contributions by others as $0, unless they come up with a check that they give you and INSIST you keep and spend toward your kiddo’s education. In this case, it doesn’t sound like this is happening and it’s much better to keep your relationship with your MIL as a loving one and choose schools that you can afford. Taking out $27K/year in loans is NOT affordable (and that amount will likely rise as tuition keeps going up, plus some kids need and extra term or two)–please look to lower price options, including in-state Us.</p>
<p>OP, if you have a 2nd kiddo, you really can’t take out too much in debt for each kid. Really think about this and choose options that you and your household can afford. (Noticed your post below.)</p>
<p>If you take out loans, how long the loan lasts depends on whatever terms you agree to and how much you pay off each month. Search for loan calculator–all you need to do is insert the amount being borrowed, interest rate and the amount you will be paying back each month to figure out how long you will be paying the loan for most calculators. Some calculators are easier to use and understand than others.</p>
<p>We were helped by using the payment plan at our kids’ college, where you can stretch payments out over 10 months instead of one or two large lump sums. You still need to come up with the money, it’s just spread out over a longer period of time. It made it easier to pay more of the money out of current income and less from savings when it was a smaller monthly sum.</p>
<p>MEFA site is bewildering, showing me how to pay for 1 year for 1 kid will take 15 years. OK so in 15 years I can send my kid for his 2nd year of college. in 60 years my 2nd kid can start college</p>
<p>If grandma winds up needing to go on Medicaid because she’s paid college tuition and then has major health issues, monies she’s given to you may affect her eligibility. If she has $750k in the bank now, there is no guarantee that it will be enough to keep her cared for til the end of her days. Are you in a position to pay for her end of life care if she gives you $$ now for your kid’s college? That’s not a bet I would want to make.</p>
<p>Please have a workable plan as to how you will pay for all 4 (or possibly more) years of college BEFORE you commit, with only loan amounts that YOU and your spouse can fully shoulder. Folks who think ‘things will work out’ may have to stop school for a period of time to get their financing together, transfer to a less expensive school (like state U) or just quit school altogether and STILL have big loans to repay.</p>
<p>Even if one can string together finances for the FIRST year, college is generally at least a 4 year endeavor, so one needs to have a plan to finance all 4 years. I see so many folks putting all their energy and resources into how to pay for year 1. They don’t think about all 4 years and some of the money offered students is only for year 1 so even more needs to be funded in years 2-4.</p>
<p>One option that works for some folks is to start at less expensive U or CC and then consider transferring to another U to get degree and diploma for last 2 years. The diploma matters more than what U the kid started at. Our D did this–started at CC and got her degree from USoCal.</p>
<p>Look at what you can afford WITHOUT loans. Then ask Grandma if she can lend the amount each year to grandson with the stipulation that it will be forgiven upon graduation. Have the loan officially written up and notarized and pay the interest on it each year at a point above the prime. That way, it’ll hold up. Explain that’s how it has to work in case there is an audit.</p>
<p>Yes, a lot of people don’t report money like, from grandma on their statements, and some get aways with it. Just like some thieves, shoplifters, tax cheats do. But if audited, it could be a problem. You are supposed to report it. But not if it’s a loan. </p>
<p>The issue is that these things can go so bad so easily. My MIL was cognizant 3 years ago,. Sadly, now there isn’t a sane person who would say she’s anything but demented and unable to make any sound decisions. So, get a school you can afford, and tell Grandma how much you’d like her to pay to make things less tight for you. YOU take control of that. Make sure it’s not an amount that you truly can’t pay so if she suddenly refused to make subsequent payments, you are all right. It should be a pure gravy sort of thing. </p>
<p>Standard is 10 year repay for PP loans. Starting spring of 1st year, you pay about $300/mo on a 27k loan- for 10 years. A year later, you are paying on 2 loans, so $600. By senior spring, $1200. In the end, could be 41k in interest, not to mention the lifestyle pain and any issues going into your own retirement. Each loan’s 10 year lifespan continues til it’s paid- not 10 years after the first is taken out. I can imagine, unless you hit some lucky break, by the time you’re done paying, DS is worrying about his own kids’ college costs.</p>
<p>If you are bewildered, all the more reason to take this seriously.</p>
<p>@halfemptypockets, those parents (and their student, who technically signs off) are likely lying on their kid’s financial aid forms if they are not reporting that the grandparents are gifting the kid money and/or paying part of their college expenses.</p>
<p>I would not count on Grandma for more than sending your kid a small check for spending money now and then. If she can do more, great. Put it aside. Don’t count on it. Count on what you and your family can and are willing to pay. </p>
<p>CPT- your system works if this kid is the only grandchild. If he’s not (and he could be 14 years older than a cousin) I think this sets up two generations worth of anger and resentment- the OP’s wife and her siblings, and the OP’s kid and his cousins.</p>
<p>Anything will cause anger and resentment when someone gives to one and not the other. But if grandma really wants give the money, if the comment just wasn’t made without thought, then grandma can lend the money that way or give it to the parents. </p>
<p>My husband’s uncle came with his eyes like slits looking for college money from his senile mother’s accounts when his kids became of college age. He was convinced that his mother had given money to my husband for his education, and wanted to make the case that his kids would have gotten the same, had she retained the mental cognitive state to pay for them. My husband agreed that they all should get exactly what he got from her which was a big fat zero. That still didn’t make him any happier. In fact it made him angrier. So you can’t win for losing in these situations.</p>
<p>Some things are just not fair. Sometimes grandmom, parent, aunt will give to one child in a family and not another. So you are supposed to decline all gifts or money just for fairness sakes if a relative offers up money for some endeavor? If the person is sound in mind, has the money, it’s her business. Some of my kids got things from me and DH and my mother and grandparents that the others won’t get. I would not be turning down gifts for one that someone offers and making conditions that the rest of the kids have to get the same. That’s looking too far into the mouth of a gift horse. </p>
<p>If I were the OP, I’d pick the schools that are affordable with some loans, affordable ones that both student and parents can afford, and present to grandmother. If she wishes to give parents the funds for freshman year, or do a loan for the grandchild as I suggested, that’s nearly 1/4 of the college loan not taken. If that’s it; the next year, grandma balks, dies or is in a state of mind that she can’t agree to the next stage, then you 've got from her when she was agreeable.</p>
<p>I would not turn down gifts, offers, favors, money from perfectly capable relatives that have the money. It’s their business as to how they want to spend the money, and if family members are so petty as to want parity, equal treatment for everything, that’s just too bad. As I said earlier, you can’t please some people anyways. Even if there was no money taken, just that it was offered could cause problems with such people or if they think it was given or offered or should have been. There’s just no pleasing some. We don’t even give equally to our children. Circumstances change. </p>
<p>If there are any other grandchildren (especially in other families), then the OP’s wife shouldn’t just think everything will work out. Once the parents of the other grandchildren learn that granny is helping with college, they’re going to expect the same. If granny isn’t prepared for that, she may have to close her pocketbook.</p>
<p>My MIL (terrible with money) paid her grandchild’s speeding tickets (3 tickets within a couple of months, over $600). MIL has 24 grandchildren. Once the other speed-demon-grandchildren learned about this, guess who started calling granny? </p>
<p>While you can’t always do the same for each child, there shouldn’t be glaring differences between grandchildren otherwise there will be trouble.</p>
<p>My H’s sis (never married), always favored my S. She saved some money that she gave just to him when he started college, as well as her pre-owned car. The sum was enough to be generous spending money for all 4 years of college. She did NOT give anything to D and as far as we know, she never gave a similar amount to her other niece and nephew–the kids of her other brother. She was also generous about giving us money periodically toward our kids’ private HS and also their college, but it was NOT money we counted on. We COULD have figured out how to stretch things (or taken loans) and still paid what our kids needed, but it was VERY nice of her and we were grateful. [We received no FAid, so weren’t reporting any of these gifts to anyone.]</p>
<p>I think she would have been VERY hurt if we or S refused her generous gifts. We initially politely declined but she insisted and we graciously accepted. D was not resentful that S got more and the car from auntie while she got no similar gifts, as we provided for her needs as well as what she and we decided was sufficient spending money. </p>
<p>I have never noticed by word or deed any resentment by my BIL or his kids. We all get along pretty well. </p>
<p>As has been posted in other threads, counting other people’s money is a sure route to more trouble than any of us want. I am glad that for us and our kids, things worked out because we HAD NOT counted on the money, but it was very welcome.</p>
<p>Sorry, but I quickly glanced through most of the posts. Sorry, if I’m repeating.</p>
<p>We are kind of in the same situation. The expense of college has gotten way above what we ever thought it was going to be for ONE child. We do have savings, but it will not be enough to put two kids through college. The first child will use a good portion of the savings. We would like our first to take his senior yr. out in a loan. Im still trying to figure out how the direct loan works. We would prefer to cover yrs. 1-3.</p>
<p>My second child will be entering as my first is in his senior yr (we hope!). This is where most of our finances will be strapped and get tight. This time I will plan better options for my second…know that I have learned a few things here on CC.</p>
<p>I wanted to share this. My Mother has offered to help, but I don’t think at first she realised how expensive school had gotten since she and my Father put their 4 children through school full pay, along with helping several relatives through med school.
For reference, I used Franklin and Marshall ( a private LAC). My sister graduated from there. My Mother remembered the ~ cost. I told her today’s cost was ~ $57,000 now. She was floored! Huge, I mean huge difference in costs. She thought back in ~89’-92’ that it was a lot. I continued to let her know the rest of all the other colleges yearly costs that our child applied to, so that she understood what the costs are today. My brother is in the same situation with his D with 2 other kids follwoing behind a yr or two later.So, she is quite aware and I believe deep down a bit scared for us.LOL! </p>
<p>While I think it is great my Mother would like to help. It is not enough for me to assume all is going to work out. I am not wired that way. I need to know that we can do this ourselves…if so, and how. I need a plan. I can’t rely on others. I can’t count on “ifs”. I would never think my Mother would bail, but I never want to put her in an uncomfortable situation of feeling Iike she committed and couldn’t feel like she could get out. Or even made to feel guilty. I wouldnt do this to anybody but to ourselves only.
My Father passed away 2.5 yrs ago. She really does have a lot of money to the point that she has no clue how much it really is…no idea that most people will never earn that much in their lifetime. She never had to care for herself before. Now, she lives very frugally. I chuckle when she won’t turn up the heat 2-3 degrees to feel comfortable in her own home for a few bucks more. I feel she internally feels that she is going to run out of money living day to day.</p>
<p>We are considering taking out loans from my Mother instead of through a bank to deter the interest. We thought about the whole “gifting” of her money. Many options, but nothing set in stone. Now, she does have 5 grandchildren, so I don’t expect borrowing huge amounts. Whatever we choose we will have it set up through our financial person so that my kids don’t necessarily know where they are repaying payments back to. All they know is that there is a monthly payment. </p>
<p>’'We would like our first to take his senior yr. out in a loan. Im still trying to figure out how the direct loan works. We would prefer to cover yrs. 1-3.""</p>
<p>No!!</p>
<p>Your son cannot use Direct Loan to cover year 4. He can only borrow $7500 for that year…even if he doesn’t borrow anything for the previous years.</p>
<p>So, instead of doing your plan, you would have to have him borrow every year, and then you pay the rest for all four years.</p>
<p>This is all he can borrow:</p>
<p>frosh 5500
soph 6500
jr 7500
sr 7500</p>
<p>total is $27000 again, he cannot borrow all of that senior year. there is a limit for each year.</p>
<p>for him to borrow more (very risky) you would have to cosign private loans or do the granny loan.</p>
<p>There’s a reason why the total limit is what it is. It’s hard for a new graduate to pay THAT amount back, so borrowing more is too risky. And some majors/careers shouldn’t borrow that much either.</p>
<p>Did your child apply to any financial safety schools? Did he apply where he’d get some merit. If not, then maybe your next child can do that so he/she won’t have to borrow much.</p>
<p>From your January thread, you said that your D got into Penn St (instate) and you were relieved because that was affordable…MUCH less than your very high EFC.</p>