Harvard has offered me parent loans as part of my financial aid package. The terms of the loan are very generous, and my parents will have to borrow $10,000 a year.
Has anyone ever heard of something like this? I have already received a considerable amount of grant money from the financial aid office, and I’m obviously very grateful for that. But I think $10,000 of loan a year, coming out to about $40,000 total, is more debt than I’m comfortable with taking on. I plan to attend graduate school right after college, and I certainly won’t expect my parents to pay off those loans themselves-they have 3 more children to worry about.
My parents’ income is fairly high, but our special conditions are so numerous that I had to write a three-page appeal to give the financial aid office an accurate picture of our financial situation. I am set on attending Harvard-but I’m not looking forward to the debt.
Has anyone else received an aid package with parent loans or heard anything like this before? This seems a bit strange to me. $40,000 is a lot of money - any advice?
I am hesitant to pester the financial aid office with more appeals because I had to work quite hard to get my financial aid package where it is now. I’m not sure how they’ll respond if I ask them to replace the loans with an equivalent amount of grant money.
Is the loan optional and are you allowed to use it to offset the expected parent contribution (at least temporarily)? If so, then you and your parents will need to make this decision together because only they can work with you to determine if they can afford to pay this money back in the future as well as pay the rest of the expected parent contribution.
My parents can cover the remaining portion of the parent contribution if we take out the loan.
Paying off the loan will be my responsibility, however. I’m going to have to take a few gap years and pay off my loans before grad school if I can’t get this resolved in another way.
It seems like there is some kind of rule of thumb on this website that one shouldn’t borrow more than an annual salary upon graduating. So, you and your parents might not find that $40,000 so unreasonable especially since the school is Harvard. Having to take time off between undergraduate and graduate school in order to resolve debt is not so unusual, even if it isn’t exactly what you planned and will lengthen your educational sequence. You and your family have to decide just how much that Harvard education is worth to you. Hopefully you still have some doors open at other less expensive schools if you decide it is not affordable.
Are your parents able and willing to take out the Parent Loans?
Were you accepted to another college that offered you better aid without loans?
Full Disclosure: My daughter’s financial aid package was so generous that it costs us LESS to send her to Harvard than to our flagship state school. And we didn’t need to take out Parent Loans to do it, but Parent Loans were offered to us as an option.
This seems very much like our situation at Princeton which, like Harvard, meets full need as they calculate it. Like you, my S was offered excellent aid, and the parent contribution could be completely covered by a parent loan with very liberal terms.
I’m speculating that Harvard is offering you grants that cover the majority of your tuition and is offering your parents pay their share with no immediate out of pocket expense. Seems generous to me. I hope it works out for you.
My parents will take out the Parent Loans-however, they expect that I will pay them back myself in full. They trust me and are willing to help me out as best as they can.
Harvard offered us the most generous financial aid package. I have, however, received a full ride at several good schools (merit scholarships). I can't see myself turning down Harvard, though.
Harvard will cover slightly over half of my total expenses. My parents are expected to cover the rest-about $25,000 total. While we make quite a bit of money ‘on paper’, that is simply beyond our ability to afford. We’ve filed multiple appeals to bring the parent contribution down to that amount, and we were just offered the parent loans recently. We are trying to figure out how we will afford the $15,000 we have to pay out-of-pocket.
I understand that there is not much that I can do at this point. I will file another appeal, but I’m not very hopeful. I fall into that unfortunate income bracket where I don’t qualify for much aid, but can’t pay the expected family contribution either.
OP, I think a lot of us are in similar situations. Your story sounds very much like ours. My kid was a National Merit Finalist, so she had excellent full-ride and full-tuition scholarships to choose from. Harvard’s package was generous, but we still have to pay a big chunk – big for us, anyway. We borrowed $5000 this year.
I have no special advice to give. I guess I want you to know that other families are giving up excellent merit awards elsewhere and choosing to pay Harvard instead. It’s a thing.
Same story here - Harvard was generous relative to other schools, but we live in an expensive area and have younger children, and the full expected parental contribution is greater than we can afford to pay. While it is not ideal, we do appreciate Harvard offering loans with favorable terms to parents rather than forcing them to borrow money elsewhere.
@jalebigirl: My daughter graduated from Harvard debt free – no loans on her part or ours – and my son will graduate Yale this May, again debt free. The education they received at HY was good, but IMHO it would not have been worth taking out $15K to 25K of loans per year ($60K to $100,000K per year over 4 years). That’s just crazy! I would strongly urge you to take the merit scholarships at another school and graduate debt free with no loans, especially if you are thinking about graduate school. Others may disagree, but I feel that Harvard (and Yale) are just not worth the cost if you are going to graduate with a mortgage on your brain. Please read these articles: http://www.huffingtonpost.com/rep-charles-rangel/student-loan-debt-crisis_b_6624936.html
On balance, I gotta go with @gibby on this one. Go to a great school for free, save your money for grad school. It’s a tough call, and either way you go, it’s a defensible decision, but in my view, $40K is a bunch of money, and grad school is going to be what makes your career.
You have already done an appeal. It is ridic to file another. If you are certain on grad school you especially don’t ‘need’ Harvard. It would be great if you could afford it but it sounds too much of a stretch.
My D turned down full merit at a top 30 school and chose H. In my opinion the FA from H was very generous and I believe the opportunities that H offered in terms of travel and research would have been hard to find elsewhere.
Did not have to take out loans to do it. The aid that H calculated in our case was very fair - it took some sacrifice in terms of budgeting and planning, but it was doable without loans. We had actually saved/budgeted for State U and were pleasantly surprised that H was substantially less.
It is surely no fun these days when the family income is greater than $100K but less than, say, $150K, and your savings (aside from retirement) are nil. Then Harvard offers a package that puts attendance so close you can taste it, but not without pain.
The mind goes around in circles. It costs too much. But it’s Harvard. They’re offering loans. And it’s Harvard. But they’ll take years to pay off. It’s Harvard. We really do love you . . .
For as long as I can remember, our “college savings plan” was a merit scholarship. And then this happened. It’s heart-breaking.
What are the terms on parent loans? Does the interest start accruing immediately or only upon graduation? How much will you owe upon graduation including interest?
So your parents have to pay $15k per year plus take out $10k making their total yearly expense $25k?
What are their options for raising $15k a year - do they have assets to sell, equity to borrow against, retirement funds to raid? Not saying these are good ideas, but the money will have to come from somewhere. If they do any of that, will it affect next year’s aid package?
What if you take a gap year now to earn money -will that affect the aid package?
Can you work now and during college to earn money?
I think if you do pick Harvard you should plan on a break between graduation and grad school to pay off the debt. Minimum one year of working.
Ok, so if I am getting the numbers right, and that the loans will be treated separately since they could have their own interest rate depending on the rates that year, and ignoring fees for the sake of simplicity, each $10k loan will, if at the 4.21%rate, cost $2,270 in interest. So parents will pay around $102 monthly in year one, $204 monthly in year 2, $306 monthly in year 3, $408 monthly in years 4-10, then goes back down in years 11-13.
So it would basically come to $9k of interest on $40k which over 13 years seems pretty good, actually.
Does that sound right or am I way off?