For us, it was a compromise between burdening our child with too much debt and saving too little for our own retirement. We chose to pay everything for our child’s college expenses but not much (like 1/3?) for the continuation of his education after college. This is what we are comfortable with in our financial situation. So this was what we did.
There will still be the expenses for wedding in the future, and there is no “student loans” for that!
And there will always be “unexpected” expenses: teeth that need crowns, a house that needs a new roof, car tires, etc etc every year.
Did my Parent Plus lan aplication today - and the sign in has changed from last year - not the FAFSA PIN snymore:
It took a few minutes to enter all the info and create the new user ID and password used to enter the site and apply for the loan. Just fyi.
This is the link for the new FSA ID:
We just discovered this last night while trying to do the counseling for D’s direct loan. Could not figure out why we couldnt sign in. It took a while to clue in that we had to create the new ID.
From POLITICO: The US government’s predatory-lending program
America earns $3 billion a year charging strapped college parents above-market interest. “It’s like ‘The Sopranos,’ except it’s the government.”
http://www.politico.com/agenda/story/2015/06/the-us-governments-predatory-lending-program-000094
Interesting article - does a good job of pointing out the negatives of the program - and there certainly are some.
My main concern with the Parent Plus loan is the lack of consumer disclosures regarding future pymts and the cost of credit - there are none. I borrowed $24,000 this week - it took about 5 minutes - with no evaluation of my qualification to repay - and no disclosure to me of what my future pymts will be. I can see very easily how someone could get in over their head.
@rockvillemom - They should require parents to complete the same mandatory counseling required of first time student borrowers under the direct loan programs. I too was able to borrow a significant sum within minutes. They dont even ask for income, expenses, etc. - really no qualification whatsoever except having good credit. Blows my mind.
Indeed. I work in mortgage banking. When someone applies for a mortgage - there are multiple disclosures showing the payment amount. I think that is the most striking omission to me - at no point did I have to sign an acknowledgment of what my pymt will be. I calculated on my own that I will have a payment of about $557/month for $48,000 borrowed for two years of college. That’s $557/month for 10 years. Not an inconsequential obligation.
I am paying interest periodically so that the balance does not increase above $48,000. If I can also pay down principal over the next year before required pymts begin - will do that as well.
I understand what I have borrowed. But it would be so easy to be oblivious given the lack of counseling/disclosures.
Hello all! Does anyone recall if you need to do the MPR and Credit Counseling again if you did it while applying last year? Didn’t want to spend the afternoon on hold when I tried to call with a question…silly me!
Hi - I had the exact same question today. You do not have to do it again if the loan is for the same student at the same university. The Master Promissary Note you signed last year would cover all years for that scenario.
My husband and I have been saving up but I completely agree. Our oldest son got into an ivy league school (we were hoping for the public school alternative since we already pay for that). While we are really happy for him and support him, we’ll probably have to end up taking out some loans for him in his last year or so… These schools really do capitalize on knowing that we’ll spend whatever for our children to be successful and progress in life.
Gail555, The economics is simple. You will find that an Ivy League brand on your résumé does tend to open more doors with higher salaries. Over time, hiring managers look for experience, skill and talent. But, the first few doors open faster and with higher compensation if you have a brand name degree. Your son will see the money. You will see it indirectly: He will support himself and does not need you to give him money. However, you will likely not see any direct economic impact. I think you are doing the right thing. You and your husband just need to make sure you can live with the implications.
Your case is somewhat similar to our case almost a decade ago. We had purchased the prepaid tuition plans a long time ago, but later we decided to shell out more money for our child’s private college education.
We now share a small, cheap car and live with the implications, happily!
Are the students held liable if the loan is defaulted? Just wondering… :-?
Does anyone know how to make that shadowing effect on the forum post? The one bluebayou used…
A Parent Plus loan is the parent’s obligation. The student has not co-signed and is not obligated. My Parent Plus loan is my debt.
DS found a great job after graduation. We like to tease HE reaps the return on OUR investment in college. But he had a lot of “sweat equity” invested too. Personally I’m thankful we don’t have parent loans. At this point a modest loan balance would probably be acceptable, but with job uncertainty these days it is nice to not have extra debt.
Our feelings abut the PP were little different than for other debt: you have to know you have the resources to pay it back and keep paying.
RVM, you know the first payments, unless something has changed, will start a few months after the money is disbursed, right? Fall semester > spring payments. And it starts a cycle.
You can also take term insurance for your parent debt. The parent’s death will get it cancelled, but there would be taxes on the amount.
We are not msking pymts yet - deferred. I am paying the interest voluntarily every month.
I can certainly estimate what the monthly pymt on $48,000 will be - but have rcvd nothing official.