<p>FAQ Parent PLUS loans… interest accrues from Day 1, etc.</p>
<p>[Parent</a> Plus Loans: Frequently Asked Questions - US News and World Report](<a href=“http://www.usnews.com/education/best-colleges/paying-for-college/student-loan/articles/2010/08/17/parent-plus-loans-frequently-asked-questions#1]Parent”>http://www.usnews.com/education/best-colleges/paying-for-college/student-loan/articles/2010/08/17/parent-plus-loans-frequently-asked-questions#1)</p>
<p>Parent loans are scary, especially with the the high and compounding interest. I can understand using them for small tide-overs, but not huge borrowing. If a family has not had enough funds to save significantly for college, I’m not sure how they will be able to pay back the loans.</p>
<p>Support the new student loan bill: <a href=“http://www.businessinsider.com/elizabeth-warrens-new-student-loan-f[/url]”>www.businessinsider.com/elizabeth-warrens-new-student-loan-f</a>…</p>
<p>Grad and professional students can take out unsubsidized Staffords at 6.8% with 1% fees. After that, they need to take out federal grad school PLUS loans with a higher interest rate and 4% up front fees. Those grad plus are taken out by the student, not the parent.</p>
<p>Once again we will be holding the bag. Many of these borrowers don’t have any assets to sell to pay off these loans. What do they care if the interest racks up on a 100k loan. </p>
<p>Maybe I am wrong but I think many on CC are not going into debt to finance college as much as other parents. I think many come here to get the scoop on making college more affordable. Sure there are ones that want the best college for their kid no matter how much it costs, but many more want it to be affordable or the best buy they can get. </p>
<p>We personally told our snowflake that we could afford instate colleges.<br>
20K a year was our budget and guess what she stayed within her/our budget. But we have large chunk of equity in our home, and no car notes or any other loans except a home loan. We are paying for college with savings. The money is all saved already and dd has two more years til graduation. Now the problem for us is to get more than double the amount we had to pay for our oldest ready for the twins. Ask me again in eight years.</p>
<p>This is one of the most helpful articles I have read on CC. Thank you for sharing this - I see the dangers and problems of PLUS loans that are packaged by parents, but what are the issues to consider when taking a private loan from Discover, Sallie Mae or Wells Fargo. I looked at a credit union as well, but it is issued by Sallie Mae - so I think it is the same loan.</p>
<p>Just out of curiosity, we applied for a private parent loan, tempted by the low variable rates. The rate they can back with wasn’t ridiculously high, but nowhere near low enough to even be tempting. For reference, the corresponding fixed rate they offered was higher than a direct parent loan. We have very little equity in our house, but otherwise our credit is very very good.</p>
<p>JannatC, how is that site helping you when it does not seem to be operational yet?</p>
<p>I’ve heard several horror stories about parents being stuck with repaying private student loans, even if their child had died (which apparently is one of the few ways the feds will cut parents some slack on repaying Parent PLUS loans). With 2 children in college this coming fall, we knew we couldn’t afford major Parent PLUS loans for both of them (what we already have for the older child is bad enough). So we made extensive use of Net Price Calculators when considering colleges for our D to apply to last fall, and the private college our D will be attending this fall (both an academic & financial “safety school” for her) will have a net cost of attendance no more than 1/3 that of the public university her brother attends (even though the sticker price of his school is approx. 35%-40% less). Picking a college with both a relatively low sticker price & great non-loan financial aid is certainly an easy way to help minimize the amount of Parent PLUS loans which will be needed!</p>
<p>We’re presently weighing out the option of a Sallie Mae, a Parent Plus or just bite the bullet and pay cash for our son’s third year. After reading copious amounts of bad experiences with the loans and the ever growing interest each day, were leaning towards cash while hinting to our son, “if this ceramic engineer career really pans out for you, you could always send us on a cruise…(;” </p>
<p>We’re pretty sure senior year will be a loan time for him but last year and all doesn’t seem like such a burden…</p>
<p>And then mom and pops can concentrate on living it up again!</p>
<p>One thing that many of these families don’t appear to be giving enough weight to in these though economic times is what happens when the parent is unable to continue working due to disability, downsizing or other factors. Many of these students will be unable to assume those payments, as many do not appear to have significant (or often any) wages to contribute, even if they minimize expenses by living at home. </p>
<p>I do worry about the many aging parents and young people who have crushing debt. It is certainly a recipe for a tough future.</p>
<p>I have watched this thread for months and am ready to respond to some of the comments. I am one of the parents interviewed for the story. I wanted to let you know I appreciate your concern, but D and I are just fine. She is graduating in December, a semester early. The past 2 years, when I have NOT taken out PLUS loans, she has worked to support herself - rent, food, etc. She has now been working in her field while attending school, and thus has some great resume-building experience. She has made professional contacts that she could not have made had she gone to the local U where we would not have incurred any debt. Last semester, she had a 3.8 while working 2 part-time jobs, taking 18 hours, and rehearsing/performing. Clearly, she is motivated to succeed.</p>
<p>We did not go into debt without great thought and calculation. We know absolutely that I can pay back what i borrowed through PLUS, and even now she could pay back her Staffords with just a few more work hours. </p>
<p>The article did not misquote me or misrepresent our situation, but I do believe people on CC did not understand that we did not just enter this situation without great thought as to the potential outcomes. We are not naive. It’s a lot of money, and I am fully prepared to start paying back the $41,000 I borrowed through PLUS once I am not paying toward tuition etc. </p>
<p>PLUS loans are not inherently bad. I do not recommend them when there is a viable alternative, i.e. a State U that has just as good a program in your child’s field at a lower cost. I would not recommend them for a child with no ambition, poor work ethic, or an “undeclared” major. My child did not fit those criteria. She knew from an early age what she wanted to do and took every step necessary to be prepared for college and career. It’s not her fault I went through a costly divorce and paid for her brother’s rehab/attorney fees. She earned the opportunity to pursue her dream, and is already many steps ahead of her peers who stayed closer to home. She is working. She WILL work. And we will both pay back our loans.</p>
<p>Some people here were pretty harsh, and I understand why. Just please don’t judge every situation involving PLUS as a bad one with a greedy child/stupid parent/needless expense. Sometimes, it can change a child’s life. I took a risk, it’s paying off, and I am grateful I had the opportunity.</p>
<p>My recommendation as someone who has been there is to really look at your child and weigh the options. Do the math, do the research, and then live with your decision. </p>
<p>Thanks for reading.</p>
<p>You and your D appear to have given careful consideration of the options AND the long term consequences, as well as weighed out repayment. You and your D are the perfect people to have these types of loans and it’s great to hear that your D is doing so well with her education and career. Congrats!</p>
<p>College education is an investment. All investments are inherently risky. </p>
<p>As for the theater … NY is better than some town in Texas, no question about it. On the other hand, I don’t understand, why an artist needs college degree, in general. The most productive years should be spend on stage, IMHO.</p>
<p>writestuff, as with many subjects on this forum, it seems to end up being about what is the right fit for the student. In your case, your choices were right and life changing for your child who has ambition and direction and perhaps a passion and a calling for her chosen career. </p>
<p>My husband and I had one child together and were able to save some money for his college education, so we’ve not had to take out loans. But our son went to a pricier private college so we are still saving and budgeting so he can attend there, and he will end up with about $12,000 to pay back. He’s like your child, he is ambitious and hard working and one who will benefit from the actual EDUCATION and while he wants a career to make good money, his mind is absorbing all that other stuff, too. From time to time I’ve questioned if he should have gone to a less pricey school, but this one has worked out well so far for both him and us. It’s just hard sometimes justifying the money spent when it seems like you have to work so hard for it and have never spent that kind of money before.</p>
<p>I think some people approach the situation realistically, such as yourself. It’s those unrealistic expectations that either parents/college students or both have that gets some into trouble by borrowing too much and not understanding the consequences.</p>
<p>californiaa
“As for the theater … NY is better than some town in Texas, no question about it. On the other hand, I don’t understand, why an artist needs college degree, in general. The most productive years should be spend on stage, IMHO.”</p>
<p>You would be amazed at the technical aspects of the theatre and the advanced training required to hone an actor’s skills. There are limited roles for uneducated teenagers and they have a very short shelf-life. Most of the successful fine actors you see in movies or on the stage received this post-secondary training. Many even pursued Master’s degrees to hone their craft. While engaged in this learning process, young actors ARE on stage in school-based productions to gain the experience they need to pursue their career. This is not an easy pursuit, or one for the lazy or unmotivated. My D’s first two years of training involved 80+ hours a week of studio, rehearsals, homework, and academic classes. She was talented before, but she is a professional now, prepared to work in many areas of the business.</p>
<p>HIMom and Miller514: Thank you for your comments. There is very little affirmation for choices such as those I made. I agree, Miller, it depends on each family’s situation and what is the right fit for the student.</p>
<p>Very true! It’s good to remember that.</p>
<p>I’ll admit we took out PLUS loans.
Our kids are first gen college, and we always had education as a priority, but our savings were small and we had difficulty paying the EFC without it.
The loans from our oldests degree at an lac are paid off.( if she hadn’t been accepted to a school that met 100% of need, she would have happily attended an instate lac)
Our youngest is attending a wonderful instate university.
We have a small PLUS from freshman yr. She had a subsidized Stafford from the same year.
We feel that education is worth borrowing money for and were not afraid of her having a small loan.
I only wish she would have qualified for work study, because non work study jobs on campus are hard to find. ( although she has one now)</p>
<p>We committed to paying FAFSA EFC for both our kids, but we could have not paid more than that.
It does sound like for some families, their debt has become unmanageable, all so Zoe or Zach can attend their “dream school”.
Which I find ridiculous. Your dream is what you make it.
I also find expecting your snowflake to get enough need/merit aid so that they don’t need ANY additional buy-in, like a small loan or a summer / school year job, to be equally ridiculous.
( especially when the families seem to have the funds for a less expensive school, but they don’t want to liquidate any assets, reduce expenditures or find an affordable <gasp> public school)</gasp></p>
<p>An income of $50,000, will give you an EFC of around $12,000-$14,000.
Compared to that, paying $500 a month sounds pretty affordable especially if you consider it an investment that you can deduct from taxes.</p>
<p>We too took out Plus loan and are paying back now. It is whatever works for your family. We are not concerned and feel it was worth it. We had saved a good chunk of money for our D education, but needed the little extra to make everything work. I don’t feel I owe anyone an explanation for our choices. And I honestly don’t care what others think about it.</p>