I agree with many others who have posted on here. Forget about a formal agreement. Forget about ever getting the money back. You can “loan” the money with the hope of seeing it back, but as other have said, what are you going to do if he can’t? or won’t?
My Mother borrowed from my husband and I many times and before that spent money my Father (they were divorced) gave her to pay for my college education. We never saw any of that money and after several years of her promising to pay us back, finally just decided to forget about it.
OTOH, my Dad lent my husband some money to start a business which he did pay back. But, my Father had the money to lend and could afford to lose it if we could not pay him back.
@austinmshauri, no, this would be more instead of government loans.
BUT, you got me thinking… I think I may have figured it out. I’m looking at numbers again, and I keep forgetting that even our UC’s are more than we’re willing to spend out of pocket, and are similar in price to the out of state school/s at issue in this post. Maybe what we’ll do is allow him to choose debt free schools - the ones in our budget - or get the government loans if there are compelling reasons to go to some of the higher priced schools. Then if he needs another 2 or 3 k we can “loan” it to him, or better yet, he can plan to work while in school or during summers, etc… If he can do the work to get more scholarships down the road, that can be a choice too. So, basically the idea that he can have a free ride (from us), or he can choose a school that will have him working more, and in some debt. If he chooses a lower priced school - even less than our budget - he can maybe have a little more flexibility in terms of dorm choice, traveling home more, etc… I’m just thinking out loud here, so I hope no one would jump all over anything I’m saying if it seems stupid. This is not easy when you have enough money to be flexible, but still want to make smart money choices, and smart college choices for the kid’s long-term benefit.
I really appreciate this dialogue to help think these things through.
Whether it’s friend, family, or something/one else, never lend more than you’re willing to lose. But your idea, above, seems reasonable. FWIW, I think he should be working summers. Period, whether he needs more money for school or not.
For our family it was about academic rigor. We were willing to pay more for it- but not willing to pay more for better surfing, nicer frats, or a more “winning” basketball team.
Figure out what you guys (as a family) are willing to pay more for. Then you can sort out who pays for what. But if you don’t know what your family “values” (as in “this is worth it and this is not”) you are going to have trouble down the road with inter-family loans.
I don’t see anything wrong in him taking out the federally funded loan, if,that improves your cash flow,while he is in college. FWIW! Our kids did that…and our gift to them on graduation was repayment of the loan.
In any event, he would benefit from working both in the summers and for say, 10 hours a week while in college. Good for the resume to have actual work experience.