<p>Hi to financial wizards,
Because safe investments yield very little now, I decided to pay off son's college loans (his skin in the game 20K-we paid rest) and have him repay me over ten year period without interest. I detest giving bank or govt interest of any amount not to mention their indefensible 6.8% plus.
Son already repaid half in one year so think it is working out. Will do the same with daughter. The question: smart or not? will government decide to change all the rules and give relief to loanholders in default after we paid through sacrifice and scrimping? I know their credit won't be buttressed but I am a cynic about all that too--where was the stress on that pre-2008?
Thanks in advance.
Marie</p>
<p>The relief is only after 25 years I think, and I think there’s some minimum payment that must be made towards it for it to count. Unless you anticipate your kids making very little money for 25 years, this is the smart thing to do.</p>
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So your alternative plan would be to go into default and hope to let the government (we the people) eat it later?</p>
<p>Sounds like you made a good decision to me. Be proud of your son for lifestyle choices that include paying more to his parents than required if he still had the loan. Don’t worry about future savings if he had kept the loan- the great thing is that neither you nor your children have to worry about loans. Hopefully you can use the money coming in for a splurge- a vacation or new stuff you went without- to pay for your kids’ educations. Also- your son’s credit score likely went up, making it cheaper for him to get future money/credit cards et al. Win/win situation to me.</p>