Your children will be riding your couches for a while.
Do you plan on using your retirement dollars to help them out?
I agree that the debt is not “common” and should not be incurred. Parents names are on the paperwork and are financially liable for the $80K.
No, sorry, IMO there is never a good reason to take out 100k in student debt- especially since the OP expects the child to repay it.
It’s $80K. Not $100K. And I think the son with a similar student loan isn’t having any problems at least mentioned. And IRC it seems to be common in their peer group.
Although graduates with that much debt sometimes make the news (usually in news articles about how they are being crushed by it), such levels of debt are not typical, according to http://ticas.org/posd/map-state-data .
@sushiritto, Confirmation bias is very powerful. I see that.
And is it 80K? Staffords are not cheaper? That would be first 27K so really after than that the PP/private loans should be 53K. Which one would say, sounds better.
@ucbalumnus Isn’t that a map of debt just from public school students?
@Sybylla One might see it “confirmation bias” others might call “past data points” or “based on prior experience(s).” Also, maybe this unknown university produces graduates with higher incomes after graduation. I don’t know. I also don’t have any details on the OP and the family, so I’m not going to judge their decision, and certainly not without a boat load of financial info that should never be disclosed here anyway.
The economy is running well, interest rates are low, oil/gas is steady and reasonably priced, stock market is near all time highs and the jobless rate is low. And the economy has had a string of months with the economy adding jobs.
It’s 80k on top of the direct loans, I’m sure.
EITHER WAY, it is WAY WAY WAY too much and parents should be steering their children away from crippling debt, not enabling it. 17/18 year olds cannot fathom that level of debt and what it does for AT LEAST a decade of their lives. It impacts their ability to buy a home, buy a car, have children, etc, etc, etc.
If you click on a state, it will show both public and private schools’ graduates’ debt levels, implying that all of them are included. Of course, since public schools’ enrollment tends to be larger, the average levels are weighted toward those of public schools. But it is hard to find any school with an average debt level of $80k or more.
There is no risk assessment for the D yet, because she won’t know what she will be earning after graduation, what the COL is where she will be working/living.
This is not about parents being able to afford the loans since the expectation is that D pays them back.
So it doesn’t matter if economy is good now, when the time period in question is the next 14 years.
I assumed the Stafford loans were already figured in, and this was about taking an additional $80k out in parent (cosigned) loans.
OP Here:
Thank you for the those who answered my questions regarding the Plus vs the Private.
We have taken the option of a Plus loan off the table
Back to your original question:
You will need to qualify for private loans every year. As your debt loan increases your credit worthiness decreases and your ability to borrow decreases. I assume (maybe others can comment) that the interest rate charged will increase with each new loan due to this. At some point, the bank will say no. Might not be an issue for you if your finances are sound.
From what I understand, Parent Plus loans have lower qualification terms and the rate is determine by law and not your credit score.
As others mentioned, for both types of loans, they will aggressively come after you, the parent, if the payments are not made. That is always a possibility since life tends to be unpredictable.
This might be the new (old?) norm to borrow like this. However since you are equally responsible for these loans then it is YOUR decision also. This is a life changing decision for both of you. Even if all goes well and she pays the loans on time without a problem, the loans are still on your credit report and will impact your ability and cost to borrow. It will also impact anything that checks your credit score.
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How is a 22 year old going to make the payments on 80K worth of debt?
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Right! If the parents can’t pay ANYTHING, how do they expect a young new grad to make huge loan payments?
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I understand the whole "if you can't pay for it you can't afford it" but every single student I know heading off to college is looking at $100K easily in student debt upon graduation that their parents have no intention of paying.
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Then you must know a whole bunch of naive parents who are willing to screw up their kids’ lives.
SMH!!!
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“loans are her only option” - Not true -
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Absolutely now. And they never are the only option for an incoming freshman.
Some parents think the child can later live at home, save on rent, and quickly pay off the loans. Not usually. Often the job is elsewhere, or maybe doesn’t pay as well as expected. Or maybe the child is now in a serious relationship and won’t live at home with mom and dad.
Sounds like DD had the stats to get better offers elsewhere. Take a gap year, take NO classes, and reapply appropriately.
The mistake was telling DD that you would cosign loans. That led to this situation.
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Class Rank: 12%
ACT: 34
SAT: 1390
GPA (Weighted) 5+
(Unweighted) 3.8
IB/AP schedule
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Oh good heavens. With her stats, she could go to some places for free or nearly free.
I still don’t understand parents who claim that they can’t contribute virtually anything, but somehow expect a young 20-something to be able to pay back huge debt.
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From the Get-Go we told her we could not pay this bill but were willing to co-sign for her.
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From the Get-Go the parents essentially told her to ignore costs because they agreed to let herself drown in loans.
Time to put on the big-girl pants on and admit that that offer was a bad one. Hofstra is soooo not worth this debt.
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We are still waiting to hear from her "dream school" Berkeley but she is now leaning heavily towards Hofstra regardless. <<<
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Thank goodness that’s off the table otherwise she’d be looking at $200k of debt.
I also don’t understand how the son, who attended an instate Tx school with merit and parent help, still borrowed $20k per year.
What is DD’s major and career goal? (And please don’t say doctor or we’ll all really freak out.)
Has the son that borrowed 20K a year paid back all those loans? Or are they transferred solely into his name?
A family that does not qualify for any FA, but cannot pay for even room and board, semester to semester, must be super aware of the implications of taking on parental debt.
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A family that does not qualify for any FA, but cannot pay for even room and board, semester to semester, must be super aware of the implications of taking on parental debt.
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And…
A family that does not qualify for any FA, but cannot pay for even room and board, semester to semester, must be super aware of the implications of their child taking on huge debt.
Sometimes I think there’s a disconnect. The family with a good income that can’t contribute much (maybe because of personal debt or high living expenses) tries to fix the problem by co-signing big loans for their kid.
Our personal perspective on this is that we are willing to fund our kids to the extent we have the money saved and believe we can spare it. So we’re willing to send ours to a state flagship school, as she’s done great in school and deserves the challenges and chances at a top school. However, we are not willing to take out loans in order to send her to a really selective private university she was accepted at, also in state, which would cost more than double the cost of the flagship school. If we hadn’t had the funds readily available for the flagship, and if she hadn’t alternatively received a good bargain at another state school, we would have followed the strategy of having her live and home and attend the local university / or community college until we could afford to send her off without loans. With the expectation she is probably going to be attending graduate school somewhere eventually on her own dime in either scenario. Whether this decision is wise is always debatable, but I have strong beliefs that 1. debt is bad, bad, bad, and 2. debt is not acceptable when you can get a decent education in an alternative way by staying at home even though the institution might not have the same stellar programs or reputation that another might have. In the long run, its mostly what the student makes of their situation anyway. I’m not sure if this is helpful to this conversation but it might be. Just my opinion.
This is for Hofstra?
OP- I live in the NY metro area. I do not know ANYONE who borrows for Hofstra. Either a kid lives at home and commutes, OR the family pays full freight and basically can afford to write the checks.
Seriously. There are less expensive options in the region like Baruch, Queens College, Brooklyn, Macauley which are commutable for a pretty vast number of college students. For dorming there is Stonybrook and Binghamton. Kids get merit aid at Fordham.
All of these colleges have stronger academic reputations than Hofstra-- at least in the NY metro area which is Hofstra’s home base.
You need to rethink this. The kids I know at Hofstra now are good, solid B students (maybe with a C or two) whose parents don’t want them too far away for various reason. Your D can surely find a better academic fit with her stats, and for SURE a better financial deal.
I assumed you were borrowing 80K for Cal Tech or U Chicago.
But Hofstra?
I have never yet met a kid nor parent ego wishes MORE debt were taken in connection with getting an undergrad degree but gave met countless kids and parents who wish LESS debt were taken, especially if said kid may wish to consider grad or professional school.