Considering 27K borrowed over 4 years make 31K with interest and represent the amount a college graduate can reasonably pay over 10 years, borrowing 80-100k on top of that is just tying an anchor around your neck for 30 or 40 years. The impossibility of taking jobs with financial background checks (because that amount makes you too vulnerable), little choice in where you live, no possibility of a mortgage or house downpayment… And if your credit becomes bad, you cannot borrow, your child has to drop out of school with the debt but no degree (actually very common 
)
Please dont do it.
There HAS TO be a better solution for your child. We can certainly help if we know your child’s stats, your budget, your state, and what your child hopes to major in.
We await decisions from State schools. I am just trying to find out about loans in case private ends up being her path.
Birdsmom- the Parent Plus loans can be helpful for people where they are in the process of inheriting a large sum of money- an estate takes time to unwind, especially if the estate is mostly in a house which needs to be sold and then the proceeds distributed to the siblings/children. So sure- borrow 25K, knowing that it’s for one year (or possibly two), and then you can write a check for the last two years and pay off the loans.
Or if you’ve started a business, have begun the process of finding a buyer, so as the owner you’ve taken a very modest salary for the last few years but will have a very substantial payday in a year or two when it sells. So sure, a Parent Plus loan is great.
If this is not your situation- and you are quite literally taking on a 100K mortgage- except that it’s unsecured, and it may take you over a decade to make the payments- you do NOT need to do this, and should not do this. A kid can always find another college. This is a very bad path to go down.
I live in a high tax/high cost of living state and now that I’m in my 60’s, I can’t tell you the misery some of my neighbors are facing once they realize that their kids college loans means they need to find somewhere cheap to retire (Mexico was popular until Covid hit) because the years they should have been saving for retirement, they were sending off that loan check every month.
There is ALWAYS a cheaper option, and in many cases, the cheaper option is better. I know lots of kids who can’t stand the idea of going to Rutgers- a fine state flagship with an excellent reputation with grad schools, employers of all kinds. So the parents took out loans for a private college which is twice the price AND has a lesser reputation pretty much everywhere. You mortgage your future for an inferior education?
Post what your child is looking for and we can help…
We took out loans for Rutgers. It cost about $30,000 a year, we had $30,000 saved for college for each kid (5). My daughter went off campus junior year and waitressed throughout, did her 5 year masters in accounting in 4 1/2 (she needed to take her cpa and needed the extra hours). We paid her interest throughout, and when she graduated and started working, the loans were transferred in her name only. I think she ended up with $60,000 in federal and private loans, they should be paid off in 4 more years, (she throws extra money on them on top of the $1000 a month payment). Same situation with our 22 year old finance graduate who also attended in state public college, he’s also on the 5 year plan (his starting salary was over $10,000 higher than his sister’s). They took the gamble based on majors and potential future employment. We are also able to help out financially if they run into problems, and they know that. However, fully funding 5 college educations while funding retirement would’ve been almost impossible.
Most families aren’t able to set aside $150k for their children’s educations. They can’t afford to pay interest on loans while their children are in school or help with the $1000/month loan payments after they graduate. I don’t believe all loans can be transferred to just the student either, so those families may run out of borrowing power by the time it’s the 4th or 5th child’s turn. If your daughter attended community college for 2 years then spent the last 2 at Rutgers she’d still have the Rutgers degree and half the debt. She didn’t have to because you can afford to pick up the slack if they run into trouble. Most families aren’t that fortunate.
$60k in debt for an accounting degree that pays $65k (if big 4, less if not) is a lot. A $1k/mo loan payment is a ton! There were cheaper routes to the same outcome.
However, @Mjkacmom 's reply highlights the difficulty in parents borrowing for their children’s college: much less than 80-100K, 150k saved, relatively comfortable family, children with majors leading to a lucrative career that they’re well-prepared for – and still, even in these best of circumstances, it’s tough. For a family NOT in these circumstances, it’d be impossible and would lead to a catastrophe (losing a house, permanent bankruptcy). In addition, college loans can never be discharged in bankruptcy so you’re stuck with them till you die, and when you die private loans are even passed on to your children or co-signers…)
@Mjkacmom situation is basically the exception that proves the rule.
Quick question, do you need to fill out the FAFSA for your child to borrow college money? We will not be seeking (nor would we receive) any need based financial aid. We have saved a lot for our boys’ college, but I feel that they should have some skin in the game (meaning a modest loan amount each year). At the end of school, we’d pay off the loan. What is the process for this or will a loan be refused since we can pay?
If you want your kid to borrow the Federal Direct Student Loans you have to file FAFSA. The max loans are $5.5K frosh year, then $6.5K/$7.5K/$7.5K. They do have a low interest rate and low origination fees that you are unlikely to get at a private institution (and parents would have to co-sign any private loans)
Thanks. Do you need to take the full amount or is that just the upper limit? I don’t want to saddle my kids with unnecessary debt, but I do want them to take their education seriously. We are very fortunate to be in a position to pay for their college education, but I want this to be appreciated and not perceived as an entitlement.
You can take a lesser amount than the max, just work with the school’s FA staff.
Thanks! I just wanted to educate myself. My older son is a junior and we are just starting out with all this.
Actually there were, fir my daughter, her grades qualified her for a free Essex county education. Of course, I don’t know if the rigor of classes would’ve been the same. As a sophomore at RBS, she was inducted into BGS being in the top 10% of her sophomore class (and received a $500 alumni scholarship). She would’ve chosen to commute to Rutgers over Essex county CC, she hated regular classes in high school. However, not everyone is eligible for free CC, which costs close to $20,000 in our county. There aren’t always many inexpensive options, depending upon your location.
That’s our plan exactly. I don’t want him taking college for granted.
I’m someone who had to pay off student loans for 22 fun-filled years. I went the cheapest route (in-state), worked full time through college, had pell grants and work study and STILL had $60,000 in student loans for a Masters in Social Work. It haunted me for just short of forever.
Based on Essex and Rutgers Students Cost of Attendance - Scarlet Hub , it looks like Essex County College is less expensive than Rutgers by about $12k-13k per year (obviously only for the first two years, so $24-26k total), if the student’s other costs are the same (e.g. if commuting to both with similar commuting costs). So that would be about $17-18k including commuting costs at Essex County College. “Free tuition” at Essex County College would reduce the cost by $2-5k per year, depending on number of credits taken and whether the student lives in the county.
Why would you take out the loan if you don’t need to. If you want your kids to have skin in the game, then lend them the money yourself or have them give you x $ a month now or after they graduate.
A loan has fees and interest - so if you don’t need it, you shouldn’t take it. You can get your kids engaged in a less costly way.
Maybe it’s too late now - but if you were willing to go out of state and your child was a top student, they could have gone South or midwest and got a much cheaper education. Kids from NY, NJ, Illinois are flooding Alabama, South Carolina, Florida State, Arizona, etc. because of this. You can’t go home on a weekend but you save your parents from working til they’re 80!!
I hadn’t thought of that. Do the subsidized loans accrue interest right away?