<p>Currently paying for a nephew’s tuition, after scholarships. My sister’s husband (the boy’s step-father) didn’t save a dime. Was going to let a precocious kid rot in junior college. We don’t want or expect a dime back. The satisfaction of saving him and seeing him succeed will be priceless.</p>
<p>@thumper1 , it is $$ we have designated for retirement. We know we will need it, but not for 20 years or so.</p>
<p>“it is $$ we have designated for retirement. We know we will need it, but not for 20 years or so.”</p>
<p>That puts a whole other spin on things. If you are going to NEED this money, you should not be lending to anyone, unless it is more important to you what the borrower’s NEED is for it. There is no guarantee that your child or ANYONE will be able to reimburse you. Things happen in life where it is possible that any given person cannot return borrowed money regardless of intention to do so, and priority as well. Now if your son NEEDED a bone marrow transplant or other medical procedure where his life is hanging on a thread, that’s a whole other things. But for school, when there are other ways to meet the cost, nope. </p>
<p>What if your son gets hit by a car after getting the degrees, before he earns penny one? Or get some debilitating condition that is going to COST money, forget paying ANYONE or anything back money owed? It happens all of the time. Or if he just doesn’t find a job that gives him any leeway and he finds himself with that loan monkey on his back that he owes YOU? You’re just giving him an ulcer in situations like that. </p>
<p>Lending money you NEED is a very bad idea. When you lend money, unless it’s for life saving things, you should do so with the understanding that there is a significant risk that you won’t get it back when you need it. </p>
<p>@cptofthehouse, I will retract ‘know we will need’ and substitute ‘would like to have’ then. After all, isn’t the very calculation of how much money you will NEED in retirement a bit arbitrary to begin with depending on lifestyle, cost of living, unknown future health, and any other unknown future circumstance that can not be foreseen from the present? </p>
<p>For us, in our very specific and individual circumstances, making the loan offer to our kids makes sense. And if all 3 took us up on it and all 3 couldn’t ever pay us back, well, we’ve got bigger problems then.</p>
<p>There are 12 years between our oldest and youngest child. We had a set amount for S1 in a 529, roughly equal to our state flagship. Anything he needed above that amount was his to earn through merit awards or employment. He received 40% merit to a small LAC. 7 years later, D1 had the same deal, but her total was adjusted for inflation plus a little more to equal the flagship COA. She is at the same LAC with a 50% merit scholarship. In 2016, D2 will attend somewhere. She is not the student her older sibs are, so while she will have the same amount of inflation-adjusted money available, H and I are not willing to spend that on her undergrad. She may end up at a lower tier LAC or a directional U. Time will tell how that plays out, but surprisingly, D2 is okay with this. Our college list for her is much different than her sibs’.</p>
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<p>A parent lending money to (for example) a student in medical school may need to consider taking life and disability insurance policies on the student / new MD until the loan is paid off. Otherwise, if the student / new MD dies or becomes disabled before paying off the loan, the certain payoff suddenly disappears.</p>
<p>oops…wrong thread!</p>
<p>I know it’s a morbid subject, but yes, something can happen to your child and you might lose your money when you lend it out. So it should be money you can afford to lose. Even with insurance on the kid, things like just mentally/emotionally not being able to handle a course of study, or deciding it repugnant can happen, I know a lot of kids who did not meet their potentials at least yet, and would not be able to make a dent in what the parents put into education for them. If the parents were really looking at that money as investments and counting on it, they are likely to sadly be out of luck. </p>
<p>The joy of knowing your kids have gotten those college years, and hopefully education, preparation for becoming a working, earning member of society is even a lot. If my kids get to that level, I am happy. Not expecting to get a dime back from them. </p>
<p>Although not a fan of loaning family members money, if you’re going to go the route of life/disability insurance, why does parent have to pay the costs of these policies? Why not add insurance premiums to loan principal?</p>
<p>When my parents lent us $35K, I took out a life insurance policy for that much on myself with my mother as the beneficiary.</p>