I refuse to take out a loan to pay for the children's college

<p>DH and I have felt like it is our obligation to pay for college. However, it’s not our obligation to go into debt to pay for an expensive private when excellent public universities were an option. As it happened, we could have managed either without going into debt, but both Ds chose the public universities as their top choice. D1 will come out of the whole thing with a Ph.D and zero debt (fully funded Ph.D program thank goodness).</p>

<p>I totally understand you point, SteveMA. Stuff happens. For sure. As I said, there are a lot of variables that go into these decisions. Some parents are in their 40s when their kids go off to college, and have lots of working years ahead of them. Others are nearing retirement. Some have 1 kid to put through school, others have many kids. </p>

<p>Speaking for myself, I’d rather drive an old clunker car til it no longer moves and put the $$ into my kids education. Others (not you, just speaking in generalities) may choose to buy/lease new cars, take vacations, and not save for retirement/college/a rainy day. Bad plan. Its like the 3 little pigs. I prefer to be the one to build a house out of brick.</p>

<p>Put it this way, would you take out a 20 or 30 year mortgage at age 52 with little to no downpaymet?</p>

<p>If we wanted to make sure we would always have enough money no matter what then we probably wouldn’t have any kids. </p>

<p>A kid should be able to pay back 40K student loans without burdening parents with it. Most people do have long term disability if they should get injured. I never count on my company’s pension for my retirement plan. I have never owned any company stocks wherever I worked, always sold them whenever they became vested. If anything should happen to me, my kids’ education and family expenses should be all very taken care of. </p>

<p>We didn’t have to borrow for our kids’ education, but I would if I had to. It is the best kind of investment one could have.</p>

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Why not? The house is worth the same whether it is a 10 year mortgage or 30 year mortgage. If you are not paying as much for mortgage, you could use that money to invest in something else. If you are not paying for mortgage, you would be paying for rent.</p>

<p>I would rather not do car payments and pay for my kid’s tuitions.</p>

<p>I’m not arguing about student loans, we are talking about additional loans the PARENTS take on so their child can go to an expensive college. </p>

<p>How much coverage do you have for your long term disability?? Most people don’t have enough to cover their day to day living expenses let alone another $800-1000/month loan payment for their child’s education.</p>

<p>My parents paid for all five of their children to go to college debt free and none of us received financial aid. My dad was not able to attend college because as an immigrant from a large family, could not afford to attend and he worked to give his kids what he could not have. My mother, a teacher wanted education to be their lasting legacy. I am grateful and appreciative to this day. Different strokes for different folks.</p>

<p>marybee333–how much debt did they have to take on to do that though??</p>

<p>Long term disability is 60 or 65% of base pay, depending on whether an employer pays for the premium or not then it would determine if the benefits are taxable.</p>

<p>oldfort–so, you are disabled, your pay is cut by 40%, you want to take on debt to pay for your child’s school, you no longer have medical insurance because you no longer work, sure, sounds like a great idea to me…</p>

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<p>Related to that, I know families who just assume their child will get into the caliber of schools they feel it would be “worth it” to pay $60K a year, and have no financial safeties at all. Then, when the child is rejected at all the top choices, they are in the position of having offered to pay the amount the elite school costs, but have to wince and write the same amount of checks for a school they do not think warrants the high price tag.</p>

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THIS. I do NOT equate a mortgage with my kids’ educations. Apples and oranges. </p>

<p>That said, If I chose to relocate and wanted to take out a mortgage, I’d do it. It would probably be a 10 or 15 year, but if it was the best decision for me/my family and I felt it was an appropriate financial decision, I’d do it. I wouldnt personally take out a loan to buy vacation propertyy at this point, but otherd disagree and would do it in a hearbeat. To each his own.</p>

<p>I think the OP is saying they have the money in the bank. In that case, I can’t understand why they would take out a loan with an interest payment associated with. Especially given what poor returns there are on savings these days. I suppose their savings could be in some other investment vehicle (stock market, bonds, etc.). But it seems dumb to take out a loan if they have the money saved for the EFC (and if that matches up with what the college says they should pay, of course).</p>

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<p>However, the OP also put this in her post. If I remember right, the OP’s son is interested in a small LAC (not top ranked) a few states away. The OP originally got him interested in the school, I believe. But then the OP started having second thoughts about him going so far away, and wanted him to select an in-state option that is also cheaper. I in most think small loans (especially if the student can take out a Stafford) are okay. But a Stafford is a better choice than a home equity loan, which is what the OP’s husband suggested.</p>

<p>Im in the not borrowing nor bankrupting retirement for 2 kids college. My kids know that mom and dad will pay instate public, with them borrowing or working for book and incidental money. #1 received pres award at state u, and covered most tuition too. Made this plan relatively painless for all. #2 is receiving offers of same awards from several state campus’. Both had offers from privates that made year 1 costs very close to public, but with little faith of costs remaining flat for 4 years, the publics, in our case are still the better value. I may sound cheap, as my EFC says, we could pay triple what Im paying. LOL. However, When college is done, there will be weddings, houses, grandchildren etc all in line to make up for what Im not spending now. God willing! Big picture, college is just another step along a long journey we hope</p>

<p>I don’t think that parents should have to go into debt to afford their child’s education. I am currently a HS Senior and my parents are both in their mid-50s. They should be concerning themselves with retirement but instead they are worrying about how they will pay for me to go to school. I was fortunate enough to get a full tuition scholarship at one of the top schools on my list, and I am applying to outside merit scholarships but if everything works out as I hope, my parent will not have to take out additional loans and will only have to pay 2,000-3,000 dollars a year at most. We are middle class and our EFC is 30,000 dollars which is waaaay out of our budget. My mother got her associates at a community college and my father didnt go to college because he went into the military, and they both wanted better for me. My mom had my older sister when she was in her early 20s and she could not afford to send my sister to college and my sister paid for it completely on her own, and took out student loans in her name. Although I wish that my parents had informed me about our financial situation earlier, I think that I did a reasonably good job of applying to financial safeties. Even if I did not get merit scholarships, I would most likely have gone to my local community college for a few years and then transferred as much as it may pain me to do it(I don’t want to stay in my hometown) because my parents have done enough for me- they both work 7 days a week to provide for me and there is no reason I should burden them with my education expenses when they are near retirement and have spent 17 years providing for me.</p>

<p>I am trying to think of a better analogy. Comparing paying for education to a mortgage or a car loan is not the same, IMO. Maybe if I had to take out a loan to pay for some necessary surgery for one of my kids or something, that might perhaps be a better analogy. Not the greatest, but hopefully you get my drift.</p>

<p>No one is suggesting that they bankrupt themselves or completely pillage their retirement account for college tuition. Thats getting a bit far fetched, IMO.</p>

<p>SteveMa - if my pay was cut by 40% and I wouldn’t have to pay tax on it then I don’t think my life style would change that much. Taking out loans to fund education is not a bad strategy sometimes. It really depends on your investment and financial situation. I think I have done pretty well with our planning. At least I didn’t lose any of my company stock money like so many of my colleagues have.</p>

<p>It boggles my mind that people would hold back on paying for education in order to fund a wedding. (Leaving aside the fact that the wedding may or may not happen.)</p>

<p>But everyone has a right to their own priorities.</p>

<p>By the way, in what universe do “most” people have long term disability insurance?</p>

<p>I do, for as long as I have worked. It gets taken out of my paycheck. At every company I have worked for it is a benefit that’s offered.</p>

<p>My point is that taking on sizable debt that close to retirement, especially in an economy like this is just not a sound financial decision. No analogy needed. Some people are comfortable with risking their retirement, I am not. People are assuming though the not taking loans is the same as not helping pay for college, that is not the case. Not taking loans means you are helping your child through an AFFORDABLE college. Even state schools aren’t affordable for everyone, and in our case cost more then the kids’ private schools, but it still doesn’t mean that you should take loans.</p>

<p>One example, we have friends that have 2 in college–well, 1 now as their oldest graduated in Dec. They have taken on significant debt and have said they have to push retirement back at least 5 years to make it work. I just don’t get it. Their kids had top test scores and GPA’s, could have gotten full rides or close to full rides at any number of schools but the kids didn’t take those options. Now, one of their children decided to switch to an education degree, so, on top of the $40,000 she took out with federal and SELF loans, the parents have about $50,000 on top of that…why??? She could have gone to a less expensive school even taking that 40K for herself and her parents wouldn’t have to take out the 50K too, not to mention what the took out for their older child. I just don’t get it.</p>