<p>Since my wife and I did not go to college and we have a son who thinks he knows everything, we have a major arguement going on in the family.We will only be able to give my son very little money to help pay for college. We have gotten the EFC back already but no financial offers from any of the colleges he has been accepted to yet.But I am trying to tell him to apply for scholarships but he says he is to busy. I try to tell him he will need to get loans theen and they will only loan him so much money.He tells me I should co-sign but I am hesitant to co-sign due to the fact I have two other kids after him and and our income is only about $60,000 a year and my wife just got done battling cancer last year.What would be the average debt most kids come out of college with these days?He thinks coming out of college with $80,000 debt is no big thing. My wife is no help since she does not comprehend the whole thing so I feel I am in a losing battle.</p>
<p>I have to say I overborrowed for my son because I cannot help with much either, and have another child going next year. I borrowed enough for everything, and I mean everything. I did take one parent plus loan for my son, which I didn't have a choice. I will not do it again. I also had to co-sign for my son's loans, well actually my mom did because I don't have good enough credit as per RISLA. they aren't going to loan money to a 17 or 18 year old kid without a co-signer. if he starts applying for scholarships,and has the grades or extracurricular stuff to get them, he can actually end up with load of money, which is what my niece did. but he does have to apply</p>
<p>Everyone has to judge for themselves. I think 80K for undergrad education is way too much. Average student ends up with 20K.</p>
<p>As a parent in my situation what is the most anyone here would co-sign for . Also what would be the most you would recommend someone would have in student loans upon graduation.</p>
<p>Your son is living in a fantasy world. I think you are going to have to do some educating, and I suggest you sit him down and put things in writing.</p>
<p>If you look at statistics reported by colleges, the average amount of debt that students report on graduating is between about $17K-$25K. New federal laws will increase the amount of subsidized loans that students are allowed to take, so my guess is that you will probably see an increase in indebtedness with students entering college now. </p>
<p>I personally think that the maximum debt should be about equivalent to what a student can expect first year earnings out of college to be. That is, I think that with a college degree, most students will be able to find a job that pays $25K/year - so $25K total debt is ok in my mind. Depending on major, a kid could earn more -- but I think you have to be realistic. </p>
<p>Another way of looking at it would be to use online tools to calculate how much monthly repayment costs will be. Then estimate monthly costs for housing, insurance, car, etc. And from there you can figure out how much your son would need to earn to get by. </p>
<p>So you would start with a calculator like this one:
<a href="http://www.finaid.org/calculators/scripts/loanpayments.cgi%5B/url%5D">http://www.finaid.org/calculators/scripts/loanpayments.cgi</a></p>
<p>Using that calculator, I see monthly payments an $80,000 loan would be about $980 - but I calculated using the maximum Stafford (subsidized) interest rate. You can't possibly get more than about $20K in Stafford loans - and with interest rates going up, it is likely that the payments would be much more. </p>
<p>Anyway, I think you get the idea. I know that as an adult I would find carrying an $80K debt for anything other than a mortgage to be absolutely devastating in terms of my lifestyle. Maybe you can help your son see that. </p>
<p>Another note -- and this comes from my own personal experience and my legal background: do NOT cosign for your son under any circumstances whatsoever. When you cosign something, you are on the hook if your son can't or won't make payments -- and you could end up losing everything. If the loan is in default, the lenders will go after whoever has the most assets. Also, keep in mind that payments on unsubsidized loans begin immediately - and if your son is in college, you would be the one making the payments. </p>
<p>What you need to do is to decide how much money you are willing to borrow under your own name -- (using financing like a PLUS loan) - and stick to that amount. So go back to that calculation of income, expenses and projected loan payments, do it for yourself, and come up with the monthly dollar amount you think you can add into the mix for each kid. </p>
<p>In other words, you have 3 kids - can you afford, out of your $60K annual income, to make loan payments of $600/month? If so, that's $200 per kid - for a PLUS loan, with the new fixed rate of 8.5%, that's borrowing $16K per kid. </p>
<p>When it comes down to it, you are going to give your son a piece of paper that tells him how much you can contribute to his college education per year in up front payments, and how much on top of that you are willing to borrow in your own name. Then you can show him the total amount that he can expect to borrow on his own via subsidized loans. </p>
<p>So lets say you can contribute $5K a year cash, plus borrow $16K total -allocated over 4 years that's a net parental contribution of $9K per year. </p>
<p>Between work study, summer employment, and subsidized loans, your son will probably be able to contribute about $5-8K per year. </p>
<p>The rest is going to have to come from grants and scholarships -- if the money isn't there, your son will have to adjust his expectations accordingly.</p>
<p>Calmom's explanation is virtually perfect, and I say that as someone in virtually the same cash and kid situation as yours. (actually, our EFC came in a bit lower - but we found the offers between a range of 100% of need schools, using exactly the same EFC and supposedly the same methodologies to vary quite widely - in fact, so much, that the differences amounted to as much as a full year's tuition, room, and board.)</p>
<p>The good news is that if they want your son, the colleges are ready and prepared to fork over a lot of cash. Just make sure there are at least one or two schools which he would enjoy attending in which he is within the top 25% range for GPA/SATs, or, alternatively, there are a bunch of 100% of need schools to choose from.</p>
<p>Do not hock your retirement and skimp on your medical needs to pay for your kids' educations -they will end up hating you for it, especially if you end up dependent on them. Remember the lesson of King Lear - beware of adolescent offspring. ;)</p>
<p>I just want to add - the reason I am very much opposed to the idea of a parent co-signing for ANYTHING, but suggest a PLUS loan (in your own name) instead is due to another "rule" I have for living: never lend money if you actually expect to get it back. </p>
<p>In the long run, if someone owes you money and can't pay, it will ruin whatever relationship you have with that person. What I saw in my law practice was parents who were not on speaking terms with their offspring and never saw their grandchildren because the parents got stuck for a debt they cosigned for, and their kids essentially cut off contact rather than face up to the harm they had caused their family. </p>
<p>So in terms of family harmony - it is much better to simply tell your kid that as a parent, you will contribute $X -- and that he will have to come up with the rest on his own. There is a good reason that lenders won't pay out to a young person without a cosigner -- their collective experience tells them that it is not a good risk. So why should you take on a personal risk that a rich corporation like, say, Citibank, won't?</p>
<p>By the way, I had the "money" conversation with my son when he decided to quit college for awhile, and I wanted to make it clear that I expected him to support himself if he wasn't in school. It was essentially a "get a job or get out" speech - not easy to make. My son did actually get off his duff and get a job, and now we get along great -- so as hard as it is to give your kid that kick in the pants, in the long run it pays off.</p>
<p>calmom</p>
<p>You wrote
"Also, keep in mind that payments on unsubsidized loans begin immediately."</p>
<p>But for subsidized loans, repayment isn't expected until after the student graduates....is this correct?</p>
<p>Thanks for the very thorough explanation. I have printed your response for my records.</p>
<p>FresnoMom</p>
<p>We were in similar circumstance only we agree to pay most of EFC- daughter contributes about $3,000 to $4,000 to EFC from summer job
we beg borrow and steal the rest
her school however meets 100% of EFC
her grants, loans and workstudy make up the finaid package
She had a range of schools where some were financial safeties and we could afford even without aid- it wouldn't be easy, but because of medical and employment issues over the years, we didn't have as much saved as we would have liked- however as parents- education has always been a priority for us, and we wanted to continue to support that.</p>
<p>I saw on another post that your son was not accepted at Univ Ill., which would have been the least expensive state option for your family.</p>
<p>Respectfully, did your family disclose to the institution all of the turmoil that your family has experienced with the illnesses of your dear wife and son, and the financial upset that was created?</p>
<p>I would attempt to contact a high level repesentative within the office of admissions (after talking with your son's guidance counselor, who could possibly initiate the discussion) and ask for a re-review of his admission file in light of the medical and financial problems your family has endured recently. I would in a very clinical, unemotional manner detail the challenges your family has faced and the exemplary efforts your son has made to overcome them.</p>
<p>College adcoms like to see resiliency in the face of adversity. Perhaps they were unaware of this, and perhaps they are unaware that their rejection of his application will make it much more difficult for him to pursue the education he has worked so hard to earn.</p>
<p>I think that this approach may make a difference for him. Please let us know. We care about your family.</p>
<p>
[quote]
But for subsidized loans, repayment isn't expected until after the student graduates....is this correct?
[/quote]
Yes, but basically the maximum that a student can get in subsidized loans over 4 years is about $20K, somewhat more if the student also qualifies for Perkins loans on top of Staffords.</p>
<p>Please do not co-sign on any loan for your son. That obligation goes on for potentially many years and can jeopardize your financial situation, your own credit status and your ability to borrow for your own or your other children's needs.</p>
<p>If you are willing to borrow $$ for your son's education (or your other children), borrow that amount in your own name as calmom says. What he can/wants to borrow under his own name should be independent of you. Calmom has given you great advice, as have others above.</p>
<p>My additional thought: if your son does not already have a "financial safety" school, one that is affordable on what you can pay, it is not too late for him to find one from among those with late application/rolling admission deadlines. It may not be a dream school, but he needs a financial safety. Not knowing what schools you are waiting on, it is hard to tell what you will face on April 1. You may receive wonderful news with your full need met at well-loved schools. You may receive disappointing news.</p>
<p>The time to map out with your son your exact financial contribution, the range of possibilities of what the schools will provide, and thus the range of amounts he might need to come up with is now.</p>
<p>Many of us know the joys of the ~18-year-old boy who knows everything :) and has precious little time to listen to our lame ideas. But, whether you need to email it to him, leave a spreadsheet on his pillow, make an appointment with him, take him to lunch.... Treat it as a serious business appointment and try to get him on the same page now. If he won't get on that page, at least you've laid it out for him in black and white.</p>
<p>Calmom's guidelines for the amount of debt a student should reasonably take on make a lot of sense to me. I also looked at the cost of a new car ($20-$25K) thinking that most new graduates buy a car as soon as possible. I think an education is far more valuable, so I don't think it's unreasonable for my kids to buy used cars until they pay off loans.</p>
<p>Calmom's point is worth repeating (twice)
[quote]
*do NOT cosign for your son under any circumstances whatsoever. *
[/quote]
</p>
<p>with an additional warning: Student loans have precedence over almost any other kind of loan. If your son can't get a job to pay off his loans (or just doesn't feel like paying them off) and you became ill or disabled and were to declare bankruptcy and went on disability the student loans would not go away and the lender could garnish your disability check. They can even go after your social security check. </p>
<p>It's not like defaulting on a car loan where they repo your car and you move on. They will come after you for their money (plus accrued interest plus heft penalties) forever.</p>
<p>On this topic, I'm wondering who is paying for school in all your cases. I worked out the agreement with my parents that they will cover my first 4 years and I'm responsible (they will help me at the moment, but I will be responsible for repayment) for law school. At this point I'm a junior in college and I'm looking at a total of about $13-15K for my first 4 years.</p>
<p>Allena, my agreement with my kids is that I will basically contribute the FAFSA EFC for 4 years of college; I will not pay for graduate school. Its a little more complicated than that - but that's the essence of the deal.</p>
<p>I think your son should reprioritize how he spends his time. I can't imagine telling my parents I didn't have time to apply for scholarships. If I had, I think it would have been the end of their good natured willingness to bend over backwards to give me the education I want.</p>
<p>I was happily surprised to find out how much money there is out there and I hope to be even happier in the next few months.</p>
<p>We all need to get real. I didn't go ED with so many of my friends so that we can compare aid. I worked the highest paying job I could this summer with most all the money earmarked for college while there was much I'd rather have done. I don't want my parents to suffer and they want me to have a superb education so it's a total act of bending on all parts.</p>
<p>brucesprings - I just read on a Transfer thread of a student who successfully appealed his rejection from his own state school (UVA).
<a href="http://talk.collegeconfidential.com/showthread.php?t=120727%5B/url%5D">http://talk.collegeconfidential.com/showthread.php?t=120727</a> You might really want to PM him, as it seems that his appeal was successful based on family circumstances and the need to have the financial advantage of lower in-state tuition.<br>
Based on your other posts, I'm wondering if OrangeBlossom's suggestion that you go back to UIUC and appeal the rejection might not be really worthwhile. Then, if the out-of-state schools don't come through with the right financial package, you might have a good option.</p>
<p>Well, as a grad student, I guess I have a slightly different perspective:</p>
<p>Co-signing can be fine - if you COMPLETELY TRUST the person. My parents know that I woudl rather starve and work myself into the ground than stick them with a cent of the loan. I'm also in a different situation: I have an engineering degree (complete with a job that I can return to) and will have a law degree when I'm done with this. My debt/earnings ratio isn't going to be bad.</p>
<p>CalMom has some phenomenal posts, but I can't resist adding the AriesAthena financial advice.<br>
1) Talk to your son NOW about what you'll pay.
2) Calculate out his projected income and expenses. Go over this with him.
3) Let him know that grad school isn't going to be a reality if he has $80k in undergrad debt.</p>
<p>As for #2.... the Aries "financing your life:"
*Average income, college grad: $25,000/year.
*Subtract taxes -> down to about $19,000/year.
*Rent in a city, sharing a place with two or three roommates: $600/month ($7,200/year) -> $11,800 left
*Utilities - what kids don't understand: cell, $600/year; electricity, $30/month = $360/year (up to roughly $1000/year); cable and internet, $30/month (sharing 3-4 ways) -> up to about $1300/year. Heat - maybe about $500/year? depends on where you live -> $1,350/year
-> down to about $10,450
*Car or misc transportation (subway, train, taxis as needed, rentals as needed): $600-$1000/year for insurance; car payments or repairs: $1,000/year or so.
*Down to about $8000/year.
*That food thing: $50/week (that's no meals out) = $2,500/year
*Leaves $5,500 per year. </p>
<p>What I've outlined is actually a pretty bare standard of living. No nights out with your friends; no meals out; that's a pretty cheap car if it's five years of payments; no gas, parking, or other expenses; no health insurance co-pays; no movies - i.e. about 5 grand of fun money, breathing room, and misc. expenses. </p>
<p>That's not much. Not sure how anyone on earth could manage that and more than a marginal loan payment (say, $1,000 to $2,000/year). </p>
<p>Please, please, please talk finances with your kids - and this goes for everyone. We don't learn this stuff through osmosis. You either learn by doing it (hopefully in a college apartment, when you still have a some backup) or the hard way. Don't let your son learn how much stuff costs until after he's in over his head in loans. Talk to him about taxes, expenses, insurance, repairs, etc. Talk to him about buying a house someday. It is nothing short of an abdication of your parental responsibility to do otherwise.</p>
<p>Ariesathena, your post is a great help -- I think your figures are also very accurate.</p>
<p>However, the problem with the cosigning of a loan is that no one can anticipate all circumstances. A student with a great educational background and career opportunities like yours could be sidetracked by illness or other personal circumstances -- and if the student can't keep current, then the parents would end up being on the hook. If the parents are able to shoulder the full debt - IF it falls to them -- then fine -- but otherwise, cosigning a loan can make things far more difficult for the entire family, because not only do the parents gets stuck for the payments, but it undermines their ability to help out the student who is going through rough times. </p>
<p>I think your comment about cosigning for people you "completely trust" simply reflects your youth -- you assume (as we all do) that your plans will come to fruition. But life is full of unwelcome suprises. </p>
<p>Simple example: student is in car accident, severely injured, long rehab expected, can't work. If the only loans are subsidized student loans, no problem -- there are procedures to arrange forebearance in the event of disability. But what cosigning means is that the parents (or other cosigners) have promised the bank that they will pay no matter what happens to the primary borrower. So at the very time when it would be nice if the parents could use their assets to help out their disabled child (providing financial support, using funds to purchase needed equipment or therapy not covered by insurance) -- the parents are stuck with the problem of the student loan. </p>
<p>I hate to be a doomsayer, but as I said: life tends to have some nasty surprises along the way. </p>
<p>I honestly feel that if the student is not going to be able to shoulder 100% of the loan payments on his/her own, then the money should not be borrowed for education. There are other alternatives - and students who are financially independent of their parents can borrow twice the amount via Stafford, which can be a help for grad students. There are pending changes to the law that will also allow grad student to take out PLUS loans in their own names, which should eliminate the need or temptation to ask parents to cosign.</p>
<p>I still think it is a mistake for a student to take on too much debt, based on wishful thinking about future employment rather than reality -- but if disaster strikes and the ship goes down, at least it shouldn't be dragging the whole family down along with the student. </p>
<p>You are to be commended for your education and accomplishments thus far. Unfortunately, at my age, I've met quite a few unemployed or marginally employed engineers and lawyers.</p>