<p>I realize that other threads - many other threads - have hit on this topic. But now that my late night hours are consumed with thoughts of how to pay for college, I'd appreciate hearing from other parents - what is a reasonable amount of money to let your offspring go into debt for in order to enable attendance at their #1 choice?</p>
<p>Like many others, we're struggling with the heart (#1 choice, but expensive) vs head (down the list of favorites, but in the right price range). I was thinking $5k/year. But that is not enough to make the #1 choice affordable. Would $10k/year debt be more than you'd risk for a freshly minted grad in who-knows-what economy? </p>
<p>As you can see, I'm also practicing my HTML.</p>
<p>First of all, there is a maximum that is usually put on these kids. Few schools will give carte blanche to an 18 year old kid. Most loans will have to be co signed by an adult. So the first thing is that you don’t have to LET THEM borrow what they can borrow on their own.</p>
<p>The cosigned loans are a whole other story. When you cosign ANY loan, you should be willing and ready to repay it since your credit is on the line too. Not only is it on the line if the principle signer defaults, but it goes on your credit report as an obligation that you have that could affect future loans for you. So it comes down to how much YOU the parent are willing to risk when you cosign.</p>
<p>Since your child is 18, if he can get a cosigner other than you, he can take out whatever loans he pleases. What you can do is show him how much he will owe at the amounts he is borrowing and what he can expect to make after college. But there are not magic number as this is truly an individual thing.</p>
<p>For most undergrads, I feel that the Stafford limits are a good guideline for student loan amounts. You can also research what the average graduate from a given school has in loans when he leaves and get some ideas as to what numbers would make your child an outlier.</p>
<p>ChiSquare, I am in a similiar position. I think $5000/year is acceptable. I told my DS that would be about owing the money for a car. Instead of a brand new car he will be paying off college loans and driving a junker. And yes we will still be short on the total amount. In my case, I have the money in savings accounts that are accessible. My question is more whether I spend it on him or save it for retirement (off-setting the losses in the 401k’s). If I had a crystal ball and knew the stock market would eventually recover it would be an easier decision. I think everyone’s financial situation is different. DS is my youngest and the last with the college bills.</p>
<p>Thanks for your thoughts. Cpt, I appreciate the discussion of loans; I’m still learning the ropes with this issue.</p>
<p>Choice of college is not yet known, and will probably be dictated by the loan issue. Major is also unknown at this point. D thinks she will go into a scientific or quantitative field, and wants to go to graduate school. But it was not too long ago that her dream job was driving the ice cream truck, so that can still change!</p>
<p>Great thread topic. We’re saying, to go to the good public college with a scholarship, no loans. To go to the awesome LAC, $5000 in loans and earn your own spending/book money.</p>
<p>Endicott, very similar to what we have said! Our version was go to cheapest LAC choice full ride (from parents, that is!) vs go to top choice & she pays for the “upgrade”. </p>
<p>We’re just disappointed that the “upgrade” part came in at over $20k/year - much more of a difference than we had envisioned. We had been imagining $5k/year as the loan amount. Boy, were we off.</p>
<p>Hi ChiSquare.
I must admit we are going w/the $10k a year loan for my daughter. We pay $10k a year from savings/out of pocket, and then we will help her pay off $20k of her final loans…We have one more daughter coming up in 2 years and we are for sure hoping our EFC remains the same.<br>
Other options would be to let her go w/the $5k/yr school and we go w/Home Equity/Refinance to help get rest…529 will need time to recover to use later on.</p>
<p>I’m with the posters on the Staffords. We will ask the kids to take Staffords if they choose a more expensive school and there is a financial gap. We (parents) will not take out loans nor will we co-sign any loans for the kids. We told them what $$ we will contribute per year when they were juniors and started “looking.” The $$ ironically is pretty darn close to our EFC. We will not budge from this budget…period. We cannot afford full freight at a $50,000 school. S1 will be about $18,000 in debt when he graduates. S2 will probably be closer to $20,000. We will pay the interest on the Staffords. Both kids work for their spending money and have since they were 16. S3 is “tight” with his money, my guess he’ll choose the less expensive school for which we will pay. It will be interesting to see if he “changes” in personality as he goes through HS. I would never, ever, ever risk our retirement or our finances for a pricey school when there are so many wonderful colleges and universities to choose from nor would I allow any of the kids to strap themselves financially as they are too young and inexperienced to really understand/grasp the longer term ramifications.</p>
<p>I agree that the Stafford loans are the limit. These are through the dept of education and are direct loans with the school. We will pay the interest while in school since they will be unsubsidized. Radannie, when you have 2 in college your efc will be divided between the kids ie. $20 K efc becomes $10 for each upping each of their chances for need-based aid while you have 2 in school. You may get some relief during the overlap years.</p>
<p>motherofthreeboys, so far we have never gotten loans and I have no experience. But you stated you pay the interest on the Stafford loans. Is the interest charged right away or is it defered? This is the student loan correct where you are not required to co-sign? You have chosen to help by paying the interest?</p>
<p>crzymom, My EFC was about $16,000. I thought that meant per kid (we have 2 in college). Now I am confused, because another poster said that my total EFC would be $32,000.</p>
<p>Make sure your kids apply to schools that meet 100% of need. Those schools that meet less of that won’t necessarily split the EFC between the 2 kids. That is what I have heard at least…I am hoping #2 goes to one of the colleges that eliminates loans from the f.a package and parents pay ~10% of income…so she won’t have any.
The 8 year old still wants to stay home w/mommy and daddy and not go to college and we will do our hardest to keep it that way!:)</p>
<p>Stafford loans have subsidized interest while in school for those with demonstrated need. Otherwise the interest begins to accrue when the loan is paid. While the advice of radannie is sound, there are not that many schools that guarantee to meet 100% of need. Those that do tend to be Ivy or Ivy peers as well as high end LACs. If you are at a school that “gaps” financial aid, then even with the Stafford loans there would be a gap. I definitely think that the Stafford max should also be your max for loans. Anything more would be a burden on most students.</p>
<p>Thanks for all the advice. The sentiment is Stafford max = family max - and that is what my gut was telling me as well. So, now I have heart in one corner, and gut and head in the other. Gut and head should be able to win this one.</p>
<p>Subsidised stafford = interest starts immediately; usubsidised the interest starts after student leaves school. Lucy55: when you do the FAFSA for each student the efc at the end is the efc for that student (not all students together). I am sorry; I misunderstood how many kids you had in school presently. My problem is that my d’s efc is ok for us this coming yr. because I have a s in school, but when he leaves next year my efc will be approximately double. So any need-based aid my d can garner this year will probably go away after her freshman year. That has taken some explaining for her to understand she may get a package this yr. that won’t be on the table in the future. Something to consider when deciding what is acceptable.</p>
<p>I’d start to feel uncomfortable if her college debt exceeded $20K. I hope to help out as best I can with the repayments after both kids are out of college, but realistically I’ll be needing to pile more into my own retirement fund then. So the debt payments should ideally remain a size that a new college graduate with a starter-level job could manage.</p>
<p>My daughter’s loan packages have run from a low of $3500 to $10k. The $10k has a big perkins in it as well…Anyone know how the loan amounts can vary so much? I understand some schools add the Unsub staff but the range of sub staff and perkins is what amazes me…</p>