That same thing could happen with any non fed loan. You borrow, you default, you pay. Private loans and non fed loans don’t have repayment plans based on income, for the parent or student. If you borrow $50k, your payments are going to be high.
Look, I don’t think the OP or son should borrow this much because there are other options. Borrowing unsecured money is expensive. The mother said there are reasons so she wants to do it, and wants to know which loans are ‘better’. Pretty much they all are expensive options but the terms and conditions are spelled out. If you default, it will cost you a lot and it doesn’t matter which loan you choose. The NJ program may have better terms for those who don’t default, I don’t know the terms or rates. Everyone who defaults thinks they were wronged, that they should have gotten to refinance or have late fees waived or pay by different terms.
OP needs to compare all the programs and pick from the options.
I think if parents take out all of these loans and then asks the student to repay it is a mistake. That is a huge burden on a kid that will also need to buy a car, rent an apartment, pay for insurance, etc for the first time. and very shortly may be thinking marriage or children. Most kids out of college make closer to 50,000 than 70,000 or higher. Don’t set your kids up for financial failure. Good luck.
I’m a parent who is an engineer, attended RPI. My boss at work graduated from a regional state school with an engineering degree. He earned a masters degree while working, paid for by our employer. Courtney’s right in that your undergraduate degree absolutely doesn’t have to hold you back.
I also think it’s very naive to think that a parent’s debt has no impact on their children. A $100K loan at 6% has a total cost of $133K over 10 years. On the other hand, if you were to invest $1,000 a month over 10 years with a 6% rate of return, you would have $164K. That’s a $300,000 swing – not a trivial amount.
And what happens if something happens to you in the next 14 years while your child goes to school and you start repaying the loan? The loan burden doesn’t disappear; someone will be paying it.
I’m one of those parents who think it’s my responsibility to put my child through college. My parents did it for me, too. But it’s also my responsibility to not make decisions that would put my child’s financial future at risk. I make no assumptions about how long I will continue to make a good living, nor would I take on financial burdens that he may be forced to inherit.
I think there’s a silly assumption going around that we will have a 100k debt after 4 years. I only needed to know what the order of the loans should be for highest efficiency. I will have paid most of it before he even graduates but I plan to leave him a sufficient (and fair) amount to own having worked for it. Every post just got worse and worse as it continued all driven by assumptions. For example, the original loan in question would be 92k, the interest paid is 35k. All of a suddent someone calculates a 300k swing HAHAHA. Quite hilarious.
This thread confuses me more than I can say. I wish OP and his son the best.
RPI costs $70k/year. You got $28k in grant aid and your parents can pay $12k. That means you need $30k/year. If your parents can’t pay it, and it appears they can’t because you said they can only pay $12k, the only way to get it is by borrowing. You can borrow ~$5500/year on your own.
That means the loans your parents need to sign for are ~$25k/year or $100k over 4 years. Unless your parents have that money stashed away in some account you haven’t mentioned, you’re talking about a whole lot of debt. I, personally, don’t find much humor in debt.
Do you have siblings your parents need to pay for or are you an only child? If you use up their borrowing capacity younger siblings may be out of luck.
my son’s cost will be 23k per year and all loans will be paid off within a year of his graduation.
So, for now you only have 12K to contribute towards college, but sometime in the future you will have more income and/or assets to pay the college bill plus get the majority of the previous years’ loans paid off? If so, then your finances are better than most posters here who intend to borrow year after year and be talked out of that.
Your son will already be on the hook for 27K worth of student loans at graduation if he takes his maximum federal loan each year (recommended, for multiple reasons).
Your loan ballooned to 100K+ in some responses because of loan fees on your 23K of proceeds per year (you didn’t say your situation was improving in future years at first), plus accrued interest, and some allowance for increasing tuition.
No, I will contribute 12k towards college. Please don’t assume things, only answer the question, thanks.
From these last few posts, it sounds like you will have a certain sum for every year but not for the first, so you will borrow $x (say $20k per year), pay it back but then need to borrow for the next year, pay it back.
That’s the only way I can see “son” graduating with no debt. If that is so, I’d borrow once, incur the fees and use all the money every year to pay for that semester and the next. Let that loan go till the end, and then pay that in year 5.
It’s pretty clear that the first post was by a student
and posts #64, 67, 69 are by a parent.
That’s why there is confusion.
So let’s say it was the kid that posted this, what part of the answer now needs to change?
MODERATOR’S NOTE: Since more than one person is posting on this account, I will close the thread.