Warning about large student loans. If you're considering graduating with a lot of debt, read this...

My friend’s daughters are aware of the hazards of student loans, given that their retirement-age (66) father has more than $200,000 in student loan debt, their parents have no retirement funds, and the parents have no emergency fund to help them cope during the mother’s now one-year unemployment.

Yes, part of the argument to skip past their local schools or flagships and go elsewhere/OOS is for lunch table bragging rights. The message is that you all are not going to have the adventure that I’m going to have.

And, yes, some are using the “going to my flagship will be like high school” is such BS. As mentioned, there’s no way that a large Univ is anything like a 2000 student high school, but even more than that…rarely would one high school actually feed that many students to a flagship unless the flagship is commutable.

I do think that there are too many over-indulged young people. Prom season is coming up and i’m aghast at my facebook newsfeed that include prom dress shopping for $600+ gowns…and that doesn’t count hair, nails and make up. Sure, i know that there are parents who are saying no to this nonsense, but it’s sad to see parents who really can’t afford these expenses stretching themselves because they can’t say no.

As for the “I’m Never going to retire” excuse for taking on big parent plus loans…i have seen way too many relatives having to retire long before they intended to. Most of the time it’s because their positions were phased out or downsized…and they were “too old” to find other well paying jobs…so they’re now retired. My own husband retired at 59, which was about 6 years before he planned, but his company shut down the entire division and that was that. Luckily he already qualified for full pension, and we have savings/investments.

However, I have seen postings on these forums (both from student and parent points of view) that strongly hint that this was the case (spent without apparent constraints on whatever including private schools and expensive extracurriculars, but then there is no or insufficient parental contribution for college).

And I’ve seen the advice given on CC that if the parents PROMISED to pay for any school the student got into, the parents HAS TO honor that promise. If the parent allowed the student to apply to a $70k school without knowing that there would be no merit aid or FA, the parents HAVE to pay even if it means mortgaging the farm.

That, of course, is ridiculous. Parents make mistakes. Most of us had no idea how college financing worked until well into the senior year of our first child. No idea of the tax consequences, no idea on the limits on direct students loans, no idea that a meal plan at college costs more for one kid for one semester than I spend on food for the enitre family for a year. I say you look little Suzy or Joey in the eye and say “I’m sorry. I made a mistake. We can’t afford $50k OOP every year. Let’s see what the options are.”

This is why the subject of money should come up BEFORE the applications go out. Parents need to know what they will contribute (cosigned and parental loans included) and share that with their children. When the acceptances and financial packages come in then the question becomes “is this in your budget?”. If not on to your next option. You haven’t said “no” because that isn’t the question anymore.

@lvvcsf : I agree.
If the parent promised and has money, and the kid made a list according to what the parent said, then yes the parent has an obligation toward their kid.
It’s the parents’ job to check costs and figure out what’s affordable, and communicate that to their kids.
First gen parents may not know but other parents, especially middle class parents, can’t have missed the talk about college costs. There was a whole political campaign about free tuition instate public universities (for all or for some) and all these “disaster loan” articles perennially in the news.
So, its normal if the cost of college comes as a shock to parents - but it’s not normal if it comes as a shock in the spring of senior year.
Parents who say “apply wherever you want, we’ll handle it” or “we’ll figure it out”, only to turn around in March and tell their kid “sorry I’m not paying” or “sorry that’s not possible” are just as bad as the parents who don’t care about parent loans. It doesn’t take more than a high school financial literacy class to know about loans and to tell your child right off the bat, even before you know the cost of college, “I won’t take loans for you”. At least the kid has some sense of what’s possible or not. (How many kids on these boards think that “everyone” takes big loans, that they can take whatever they want, that their parents will be approved…? If loans are off the table the process becomes more real.)
So, in my opinion, if you promised to pay and have the money, yes you should honor that promise.
Should you honor a hastily/rhoughtlessly made promise, ie., should you take on a parent plus/co-signed loan just because you said you’d pay? In my opinion parents absolutely shouldn’t and, as mentioned above, should admit they made an honest mistake - but should be ready to help with a Gap year or the NACAC May List.
It doesn’t stop at “I made a mistake”. The parents are then responsible for helping their child and clean up the mistake.
(Some parents may think of taking on loans as cleaning up the mistake rather as compounding it, though.)

My 15 year old has been whining for 3 years she’s the only kid at school that doesn’t have a MacBook. Life is hard! She saw the whole process play out with her older brother.

Not to be morbid, but your kid can promise all day long that they will pay back the loans, but things happen. My friend’s son was killed in a car accident weeks after finishing school. Guess what? They co-signed and the loans they had didn’t go away with their son’s passing. 6 years later they are still making payments.

I disagree. Kids and parents are being told all the time that there are scholarships for smart kids, for athletes, for community service so go ahead and apply for them, the money will come. I don’t think the average middle class family knows how much college costs. Many assume their kids will just go to a state public school and don’t know how much that will cost either. The applications are submitted earlier and earlier, before the parents even have time to pull all the information together.

When was this talk? The first one my kids’ school had was Oct 15 of their senior year. Applications to UF and FSU were due the next DAY. We were behind because we had moved to the state while they were in high school and weren’t focused on those schools,or on any schools really. We were still getting out feet back under us and just trying to figure out high school. The only money discussion at that meeting was to apply for bright Futures and fill out the FAFSA. There was no individual meetings with the guidance office about college, no help for anyone not going to a Florida public school. And this is at a top public school. I was a middle class parent who had gone to college but when I went I sent in an application, got accepted a few weeks later, and went to that school. No financial aid, no tax benefits, no FAFSA.

If a parent says ‘we’ll figure it out’ and the way they figure it out is to take big loans, they should stop right there and make a new plan. Do not borrow the money.

I received my college financial planning education from this website and much of it from reading the posts of the OP. Luckily I happened upon it during our oldest Ds sophomore year in HS so it gave me a dose of reality. I think we would have expected more and ended up with less without the guidance. Things have worked out well for both my Ds and our family but I could see the results being much sketchier if I hadn’t happened upon this site when I did.

Our school holds college planning meetings every year - the invitations are sent to the entire school and parents are told it’s never too early. We went during my son’s sophomore year. It included a talk from a local financial person, which I realize was a marketing stop to get people to sign up for his services, but he brought up a lot of good information and gave me a good place to start in the planning process. We also started 529 accounts for both of our kids at birth, knowing it wouldn’t cover everything but at least we’d have something.

SIL told me on Sunday (after several Super Bowl drinks) that they have co-signed over $50,000 in loans for Kid #1 (who has also taken her own federal student loans) – and that’s just for years 1-3 at in-state flagship. She said she wished her D had commuted for 2 years and then transferred, but they couldn’t make her do that since she’d liked Penn State so much better than the directional. BIL’s take was that it’s no big deal: Everyone takes out loans, parent co-signing is just a formality, their D will be able to pay the loans off quickly, etc. (She is majoring in psychology so no indication of an especially high salary upon graduation).

I am not looking forward to how this will work out for their next three children…

@LuckyCharms913 Ouch. Assuming she does stick with Psychology she will probably need an advanced degree to be able to do anything with it that will provide a significant salary which will require…more loans. There are many scenarios here that don’t end well. Good luck to all.

A friend let her daughter take out $50k in loans, cashed in some of her own 401k and borrowed against the 401k, and took some Parent Plus loans. The original plan was for half of that, but as the years went on and scholarships were lost, they felt they had no choice but to keep borrowing.

People always say that the undergrad can only take $30k in direct loans, but that’s not true. There were Perkins loans, there are extra amounts that the student can take if the parent is denied Plus loans (that happened here), there are loans from the school. This was a typical student and she got to $50k in just 4 years. There are students who go more than 4 years and just keep borrowing.

@LuckyCharms913 I think parents taking out large loans for Penn State, Pitt, or Temple is unfortunately too common among average income Pennsylvania residents. My daughter said many of her friends’ parents do so. I refused to take out loans for the state-related schools, so my daughter is at West Chester rather than her 1st choice Temple. She wishes I could afford to let her transfer to Temple, Pitt, or PSU.

When cosigned loans are taken, wouldn’t having life and disability policies covering the borrower and cosigner (beneficiaries each other) be necessary to cover these types of situations?

“Everyone takes out loans” may be more common in Pennsylvania, due to the poor affordability of the in-state public universities (including the CSHE branch campuses and the PASSHE schools) there. But that does not make it good or desirable to do so (either for students/parents, or from a state government policy standpoint).

“When cosigned loans are taken, wouldn’t having life and disability policies covering the borrower and cosigner (beneficiaries each other) be necessary to cover these types of situations?”

You can buy it separately, but most people borrowing thousands of dollars for their kids to go to college don’t have hundreds of dollars per month for insurance on two people. A policy on the student might be cheap, but on a parent could be steep. Disability insurance is trickier, as some would require the insurance to be unable to work at any job since this is insurance not purchased through an employer. The payments would go to the insured, not to the lender or to the parents in the case of a student insured. If the student becomes disabled, it is likely he’d need the money for living expenses.

Pennsylvanians are in an especially bad situation: their flagship is similar to NYS contract colleges, much more expensive than a state University, and offers terrible financial aid to boot, while the directionals have been slowly defunded. Many parents don’t have much choice - there’s a 2+2 system similar to TAG in California or Virginia but at several times the cost. There are lots of private colleges that offer competitive pricing but they’re not accessible or affordable for all. It’s truly catastrophic.
Illinois is also in a really bad situation with very high prices at the publics, bad financial aid (and due to bankruptcy always at risk not to be paid or paid late).
Surprisingly (not) Pennsylvania and Illinois are among the worst for lower income state residents access.
(Yes, I know, UVA - But other factors are at play.)
Perkins loans no longer exist I believe.
In my opinion, the cost of private and OOS colleges is separate from the cost of public universities for state residents. Taking on a loan to pay for a private or OOS university is the foolish parents’ fault, as well can assume there was s good instate choice providing similar offerings at a better value (due to the in-state “discount”). It’s on the parents and the kid if they make that choice.
Having to take on a loan to afford a public university in your own state, effectively keeping the state university’s out of reach for academically qualified residents is wrong and the state’s fault. Its not the family’s fault if their state failed to deliver what most Americans have the right to expect (and what the states deliver in many states, from Florida to California, Iowa, and Wyoming).

But even the states that have a high cost to their flagships offer other schools that the students can choose. CU is priced beyond the budgets of many Coloradans, but there are other public schools that are in budget. Illinois has other schools in the state that are a lot more affordable than UIUC. Many states have tuition agreements with neighboring states.

I don’t think those who have $50k, $75k in loans are the ones who had no other choice from their states. They are the ones who wanted a specific school. We had lived in California so my kids wanted to go to college in California. I said no. I said no to a lot of things so they were used to it.

Using https://www.collegedata.com/cs/search/college/college_search_tmpl.jhtml to search for public schools with student debt over $35,000 gives 51 results, of which 22 are in Pennsylvania.

Not all states have 22 public schools.