<p>The APR's for student loans are around 2% less than say a Salliemae loan.
I figure I'm going to be paying anyway, so why not save the 2% and why doesn't everyone do this ?</p>
<p>Thanks
Parent</p>
<p>There is some protection afforded you if you go the Parent’s Plus route. I know a family who suffered the loss of the father. The parent loan was forgiven. Private student loans never go away. Ever. But, darn few people suffer that kind of a loss.</p>
<p>Student loans are also limited in the amount a student can borrow on their own. Other private student loans require a cosigner,which puts parents (or the cosigner) on the hook for repayment as well as the student, and also dings both student and cosigner’s credit score.</p>
<p>Yeah ordinarylives , thought of that already. I figure that when I die, my son gets the house, so he can sell that and have cash for loans.</p>
<p>bhmomma we would def cosign since we’re paying them anyway.
The way it is now…<br>
1st year …25k
2nd 3rd and 4th figure 35k each… Yeah yeah , I know that’s a lot. Thankfully I only have one kid.</p>
<p>Oh the stress…</p>
<p>
</p>
<p>That’s not a lot; that’s insane for any undergraduate degree, regardless of how stellar the institution. You should seriously re-think this college choice before it’s too late because if you have to borrow that much, you clearly can’t afford it.</p>
<p>If you couldn’t save that much before college how will you pay it after?</p>
<p>Many families look at the student loans as their kids’ money in the game. The Staffords are limited to $5500 freshman year, $6500 sophomore and junior years and $7500 senior. A lot of folks believe that is the maximum loan burden a kid should take. Sometimes Perkins loans are in the mix. Those loans are subsidized while in school and some of the Staffords could be, if there is demonstrated need. My opinion is that those maximums are wise to observe in terms of what kids take out, and yes, the interest rate is a bit lower than the PLUS loans for parents. </p>
<p>When you apply for PLUS, if you are turned down, yes, you can be denied, it is not a right, you student can take out an addtional $4K in Staffords freshman year. That’s really about it without going out to the private lendes. If you are getting private loans, the terms are often not as favorable as PLUS and the loan will hamstring you AND your kid to the repayment terms. You die, the kid still owes. The same if the kid does. Not so with the student Stafford and PLUS. Also, you will get hit with fees and all kinds of penalties and strict schedules with these outside loans most of the time, if your credit is not good enough to get PLUS. </p>
<p>I suggest you stick with SallieMae unless you belong to a credit union or have some other loan source that has great terms, and keep the kid out of the picture. If he is looking for some banking job or security type position, large loan balances on his credit history well hurt him.</p>
<p>I hear all of you and you make some very valid points. I’m just so flustered and confused.
My sons 2nd choice will result in about 100k for me in the end. Either way I’m done in the end.</p>
<p>I’ve heard three or four terrible stories of heartbroken parents from our area paying off dead children’s co-signed private loans, as there is no forgiveness. A 21-year-old was killed in a car crash or or a 24-year-old died of cancer. The parents still have to pay. Too much of a risk, in my view, if you’re on the hook for thousands and thousands of dollars. If you co-sign loans, make sure your kid has life insurance for himself.</p>
<p>Some people take out PLUS loans, consolidate them when the kid is done with school, and pay them off in one lump sum with by taking out a cheaper home equity loan if they have sufficient equity in their house to cover the PLUS balance.</p>
<p>An oft-used formula for determining how much college you can afford is to think in terms of 1/3 savings, 1/3 current income, and 1/3 loans. The most expensive schools in the country cost about 60K now, which means that even affluent full-pay parents really should not take out more than 20K per year in loans to fund kid’s college.</p>
<p>
But it’s not the end. Your son can try for some colleges that are still taking applications, or, better yet, take a gap year to earn some money and consider smarter choices when he applies next time. And by then you won’t be “flustered and confused”, but better educated about your options (people here will help). I doubt there’s a single parent who frequents this forum who doesn’t think you’re making a big mistake. That should give you pause.</p>
<p>coffee12 -</p>
<p>This place is unaffordable. Period. Your son needs to find a different option. Maybe there is one on his list that is affordable for your family, but he just doesn’t like it much right now. If none of them are affordable, then he needs to come up with a new list. He can do that by checking around for rolling and late-admission places that meet your family budget, or he could start at a commuting-distance community college for the first two years, or he could take a year (or more) off while he works, saves money, and thinks things through more carefully. Do not let your desire to let him attend X, Y, or Z ruin your finances for the next 10 or 20 years.</p>
<p>Have him run the calculators at [FinAid</a> | Calculators | Loan Calculator](<a href=“Your Guide for College Financial Aid - Finaid”>Loan Payment Calculator - Finaid) to see just exactly how ugly $100,000+ in debt can be.</p>
<p>Coffee12, I would think long and hard before making this kind of commitment. You just might be teaching your student a far more important lesson by showing him why this kind of borrowing is just not worth it. Does he have any less expensive choices? </p>
<p>If you can really afford it, a parent loan (PLUS) might be the way to go. Start paying on it right away after you take it and your last payment will be 10 years after your first one. Doing this each year means 14 years of loan payments for this. I’m living this so and I can tell you it hurts. But it won’t be on your son’s credit record to impede him when he is trying to get a job, an apartment, a house,etc when he graduates, and if you should pass away, the loan is forgiven; he does not inherit it.</p>
<p>Does a PLUS loan pass on to a spouse if the husband or wife die. If I take out the laon and use my name and I die, does it pass to my spouse?</p>
<p>No, it does not. Only the person taking out the loan is responsible for it. However, if you are turned down and need a cosigner, that person would be equally responsible. If one parent is turned down, better the other parent try for the loan than to cosign it because then both parents instead of one are on the hook.</p>
<p>My D decided on a state school. After scholarships and savings are taken into account, we’ll need to come up with “just” several thousand dollars a year out of our income. I nearly had a panic attack when we put the deposit up yesterday. </p>
<p>That was with no loans. I wouldn’t ever sleep again at night carrying loans that high. Re-direct your child! Bankrupting you is not the right way for your son to get an education.</p>