Loan forgiveness CAN be done, but that doesn’t mean it’s easy. What will her life be like during those 10 years she is making onerous loan payments? Will she be prevented from affording a car, a place of her own, the chance to spend time with friends and to travel? And does forgiveness extend to parents? While the school may appear to be a perfect fit, there are sure to be other perfect fits out there that would be more affordable. Having seen several relatives forced to drop out of school with high loan debt, and one who made an admirable - but difficult - choice of enlisting to pay off his debt - it just does not make sense to go so far in debt for a college education.
And as others said, what is your plan if YOU are denied parent plus loans because of the amount of debt you’re taking on for your degree? What do you tell your D if you can’t borrow the money to keep her in the “perfect” school? The “perfect fit” should include being reasonably affordable.
If your prospects are strong after you finish your degree, does it make sense for your D to do a couple years at a community college then transfer to a 4-year school once you are done and her education would be more affordable?
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This is not a sound financial plan. At. All
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And that’s the biggest understatement of the year.
This plan is financial suicide.
Allow your D the opportunity to apply other colleges that are still accepting apps. Take your foot off that loan pedal.
The daughter’s loans (Stafford, Perkins) would be hers and she would need to qualify to have those forgiven through the program. What usually happens is the graduate applies for IBR, income based repayments and pays 10% of the disposable income. Sometimes that payment is $0 and she’d get credit for making 12 $0 payments for year one, perhaps have to pay $20/month in year two, etc. If she fails to file the updates for recalculating her 10%, her payments could jump back to $400-500/month. Interest keeps accruing at the loan rate, so if the borrower doesn’t complete the 120 payments, the amount owed keeps growing and growing.
The mother would have her loans plus any parent plus loans she’s taken for the daughter. The mother’s loans can’t be combined with the daughters, so if she wants forgiveness, she’d have to have her own government/nonprofit qualified job, her own IBR plan, her own 120 payments. Again, anything goes wrong and all that accrued interest and lower payments comes right back on the balance owed.
You know these loans will never be repaid. The taxpayers will eat them.
I really appreciate all the helpful comments! I do really appreciate the well-meaning concern! I realize I’m putting myself in a dumb amount of debt for most people. To be specific, it’s currently 30 grand in my own federal-only student loans (income based repayment plan=0 dollars per month currently) I’m a microbiology student, graduate assistantships (virtually guaranteed where I’m going) brings costs down tremendously. Most likely scenario: I end up with a 50 grand bill in largely forgivable loans if I work in Public Service, what I want to do anyway. Grand total for the both of us not counting her (typical) 30 grand in federal loans=86 grand. I’m a spry 38 year old, with no other kids in the pipeline.
^typo *76 grand total plus monthly income-based payments on the 50. Golden, right?
Just remember that after 5 years of working for a government in microbiology at $80k per year, if you are offered $120 to go work for Monsanto or Dupont or a non-qualified employer, you’d owe all the $126000 ($50k+$76k), and all the accrued interest and deferred payments. At that point it is unlikely you’d be able to take the new job. Also, your credit report is going to show you owing ALL of the amount until it is forgiven, so probably 11 years without being able to buy a house or qualify for a big purchase.
It’s a bad plan. You are welcomed to come back in 15 years and tell me how wrong I was.
I really wish people would stop insulting people who ask questions. If you can offer advice, do so. If you want to chew people out for making what you think are bad choices, just shut up.
This is a choice that will haunt the OP (and her kid) for years. And for a dumb reason. No school is so perfect that you should do this. When people come out here with plans that will ruin them financially, we are going to tell them so.
You’re right, I wouldn’t dare enter the private sector! I’m not trying to get rich. Just want a 1 bedroom, a little dog and to be highly functioning member of society. I know. Hippie nonsense. Student loan debt doesn’t wreck your credit unless you’re delinquent. I don’t need or want to own a home and I have immaculate credit.
Just wondering, with income less than $20k per year, will OP even be able to qualify for parent loans? Isn’t the ability to repay and credit history part of the assessment for the loan to begin with?
What happens under these favorable repayment plans if you lose the government job, or get too sick to work? Serious question, I’m unfamiliar with how it works. But it seems to me that a lot of “life” could get in the way, and you will need all of this to go perfectly with nothing getting in the way, or the whole house of cards will come down.
Would you want your daughter to proceed in this way when she’s 38? This is what you are teaching her. I just don’t see the harm in at least sending out some more apps to instate colleges or colleges where she could live cheaply at home.
Exactly. I don’t see anyone insulting anyone, but OP’s situation is so clearly a recipe for disaster that strong language is warranted. OP is the one coming to CC for input, after all–no one’s forcing it on her.
This type of situation (thinking there’s one perfect school for me, and that the debt will magically take care of itself) is exactly how people find themselves in situations like this:
http://www.slate.com/articles/business/moneybox/2016/01/student_loan_crisis_at_its_ugliest_i_graduated_and_found_out_i_owe_200_000.html
Good question! I have near perfect credit but if the plus loan doesn’t pan out, she’s off to an economy school. No private loans!
Thank you AboutTheSame! People need a release, I guess.
I do think it is unethical to take the loans with the intent not to repay them, but that decision is on you.
Parent Plus loans do not ask about ability to repay. It’s ridiculous, but it is a government program after all.
The reason it’s forgiven for public service is that the citizen is working for the government. In the same way many private sector employers pay their employees college tuition. Investment.
What’s your repayment plan if neither of you are able to get a government job?
I’ll be the one working in public service, in this field jobs aren’t difficult to come by at all.
Maybe I’ve been unclear, I romanticize when I write, my fault: …I’m in a brainstorming phase…hence the college confidential question post…there are no bad ideas in brainstorming…I’m a reasonably intelligent and responsible adult…I’m collecting advice…if it looks like I’m about to cause an economic collapse…I’m going to reevaluate…breathe into a paper bag…
I do really, really appreciate the well-intended advice
My advice would be to find a similar school your daughter can attend with little to no debt. She’ll have more choices in life if she doesn’t have debt dragging her down. Are her stats high enough for guaranteed merit anywhere? If she took a gap year, could she raise her test scores high enough to get a substantial award?