Traditional College Loan or Home Equity Loan

With his stats there is no compelling reason to go OOS. Pick your cheapest best option in state. If money is tight, pick a school in commuting distance. What major?
Again, there is no reason to go OOS. He isn’t getting real merit anywhere, and you have good options instate.
As for your 401K, have you been paying attention to that this fiscal year? the great years may already be over. Do not borrow that.

Your child can attend one of the smaller SUNY colleges for about $22,000 a year. There is no reason to attend Siena… none.

I have never heard of this school, but what is the reason for applying there specifically? is it a religious school? You are looking to borrow the whole COA pretty much. That means you would have trouble paying even instate 25K schools. What is the actual realistic plan?

OP do you live within commuting distance of a SUNY? Tuition is about $8000 a year.

Why isn’t a gap year an option?

If you’re in NYS and within commuting distance of a SUNY, the federal student loan and a summer job will just about cover the tuition. If there’s no 4-year SUNY near you, look for a cc. But don’t saddle your teen with that kind of debt. If you can’t pay $160k and haven’t been able to save it, what makes you think he’ll be able to come up with that kind of money?

“Ideally my child would pay back”
How? 160k is huge. How is he supposed to live the life you want to give him, via a private college, when he’s tied to such a large repayment? And, possibly support your retirement, if you drain that? Don’t chain him to this for the short term satisfaction of a private college his parents can’t afford.

That amout could buy him a small starter home in some places.

Did you look at the guaranteed transfer programs in NY state, where two years at a local college can win transfer to a SUNY? Or better? Even Siena has a TAG option.

@Sybylla -

Siena is a NYS school but it’s private, so it’s OOS but it might as well be considering the costs.

If you already have a heloc in place, does that mean you’re borrowing against your home now? What’s your back up plan for repayment if your son becomes disabled or dies before the loans are repaid? Or just simply can’t or won’t pay? You’ll be responsible for them and they won’t be forgiven. Can you repay $160,000 + interest on your income?

Op- yes, people raid their 401K to pay for college. And they end up indigent and elderly, living in a public housing complex with their kids frantically trying to supplement the parents social security check with an extra $100 here or there to pay for whatever public assistance does not.

160K in loans (regardless of the type of loan) is a terrible plan.

@Leducate2018 What’s your real question here? Are you asking us if you should borrow money at 3.5% or 6%
I think you know the answer to that.

I’ll leave the life coaching to the other posters. They make good points.

Why isn’t a gap year an option? I would take a gap year and investigate the SUNY schools that might give your child merit. SUNY Oswego is one example. I know 3 students who recently graduated from Oswego and are happily employed and living on their own- please don’t think that the SUNY schools are somehow inferior to Siena.

If you do not have any savings now, how will you have extra cash to pay back a huge loan? Using your retirement savings is a BAD idea.

We will be using a home equity line of credit. This year we paid off our mortgage with it, because it has a lower fixed interest rate than our former mortgage’s fixed interest rate. Now we will use it as needed to pay my son’s college and graduate school expenses. I am not sure what your situation is, but we will not need to tap into a loan until at least my son’s senior year of college; the 529 and our savings and his grandparents’ 529 will carry us through the first three years. For senior year and grad school (e.g. if he picks law school instead of a funded PhD program), we will see where we are financially. If needed, we may apply for financial aid (his undergrad is a “meets full need” college) and/or we may use the home equity line of credit.

Then again, for us, this loan will not be paying the full amount of tuition and room and board, just supplementing our savings/income to close the gaps.

My husband and I believe strongly, as did both sets of our parents before us, that our child should be able to start his life without any debt of his own, so any needed debt should belong to the parents.

Then again, we are fortunate enough that such debt will not be staggering. If it would be, or if we had had several other children coming up, we would have applied for financial aid. But we still would have paid off any loan portion, not expected him to do so.

We have made all our financial decisions since before he was born with paying future tuition at a top private college in mind, so that that would be an option for him if he wanted it and had the grades for it.

My parents remortgaged their home for my education years ago. It did not cause their financial ruin. Things were tight for a while, but they are now living a very comfortable retirement. There was enough time in between my education and their retirement to recover.

College is the biggest gift, other than love of course, that parents give their children.

@techmom99 you wrote…

I think you left out a word…Siena is NOT OOS.

This student apparently got accepted early action…hopefully. Those acceptances were released Feb 15. Hoping her acceptance was NOT early decision.

Anyway…back to the OP…

While it’s fun to get that first acceptance, it’s also important to NOT get caught up in excitement for a school,that is very unaffordable for the family.

Did you already receive your financial aid package from Siena?

I know graduates of Siena. I also know graduates of a number of SUNY schools. Siena is a nice, small campus…but in my opinion, if you have to take out $40,000 a YEAR in loans, it’s way not affordable for you and your family.

As noted by many others…you have a number of SUNY campuses in New York. The costs are much more modest than Siena would be. If your income is less than $100,000, your kid would be eligible for the Excelsior. If your kid is majoring in a STEM field, she would be eligible for a STEM award. Are you TAP eligible? You can’t get them all.

You are making it sound like your income will not support attending a Siena without HUGE loans.

I’ll say it again…$40,000 a year in loans is TOO MUCH IN LOANS.

Is there some compelling reason why your kiddo is not considering colleges with affordable costs? Is there some compelling reason why your kid MUST attend Siena?

@thumper1 -

Yes, I missed a word. Siena is in NYS. Also, for this upcoming school year, the Excelsior limit is $110K, federal AGI.

You are so right about the excitement. My D applied to U Hartford very early, before school even started. I did not permit any ED applications in my house for financial reasons. She got a phone call accepting her in early September and she was ecstatic. Ultimately, she opted for a SUNY. I gave her the choice of paying the difference on her own with loans, scholarships, etc. after the base cost of SUNY was paid by me. Fortunately, she is a pragmatic kid and decided to go the no loan route.

One thing I will say is that both she and S17, who is also at a SUNY, tell me about friends and classmates whose families have taken out loans for them to be at a SUNY. This may diminish as Excelsior goes into more effect, but my D, in particular, is very cognizant of how lucky she is not to have debt. She has friends who went to private schools on their parents’ dime but she also has friends who are struggling to pay student loans each month. My D is able to put away the max for her retirement, as well as live in Brooklyn and travel frequently. My D thanks me often for paying for her college and for helping her to see that debt free was the right way for her to go.

I know many parents who put themselves into serious debt for a private school education. Unless that school is an Ivy or Ivy equivalent, I don’t think it’s worth it.

Do not get the loan either way. It is not worth to get $160k in debt for a degree from a private if you can get the same degree from the in-state public. If you have no saving while working for decades, how would you expect to pay back that $160k plus interest?

When we say that our parents paid it all for us, costs were radically lower then. It’s 20-40 years ago.

As some other posters sometimes suggest, consider the cost of the loan and subtract it from your monthly budget today and project foward. Could you live on 3-500 less/mo today, $1000 less after a year? The Heloc would be lower, but still.

To the OP…

This month…start putting $2000 a month into your savings account. See if you can love without that money. Because…your repayment for $160,000 in loans will be about that amount when your kid graduates.

Since you have NO savings per your other posts…I’m guessing you won’t be able to do this.

This should tell you how unaffordable Siena really is.

I can think of others. A debt free start to life instead of a $160,000 + interest lead weight. Self sufficiency in our retirement years instead of creating the possibility of being a financial burden. Avoiding mortgaging our retirement for a 4 year experience that our children can feel guilty about and regret at their leisure.

My son commutes to a SUNY. The 4-year degree he’ll have at the end qualifies as a college education. He’ll graduate with a 4-year degree and no debt. That’s a gift.

That is so spot on, @austinmshauri. Add to it, family bonds free of the month to month strain and the performance expectations that come with “hocking the farm,” so to say.

“College is the biggest gift, other than love of course, that parents give their children.”

TheGreyKing- I’m going to assume from this post that you do not have an indigent in-law living with you, or are not supporting an elderly parent who ran out of money but is still “going strong”. Ask anyone who has- your neighbor whose kid gave up their bedroom so grandpa would have privacy, your friend who quit her job to provide care to a parent with dementia because only skilled nursing is covered by Medicare, or your boss who gave up plans to retire at 65 because his 90 year old dad would be homeless without the check he sends every month.

The biggest gift is NOT showing up on your kid’s doorstep having spent down your own retirement years before you should have. That’s the biggest gift. The fact that it requires some discipline to be self-sufficient in retirement-- yes, it’s painful to tell your kid NO to the Heloc, the private loan, or spending down your 401K-- it’s a lot more painful to be dependent on your kids.