I know families who did this kind of arrangements to pay for NYU-Stern. It took 4 Wall St. bonuses to pay loans back. 5 years of sharing an apartment in Manhattan and working non-stop. Not a glamorous life. Now with the new prices it may take 6 years.
^ and what about those families that did that but their kids were never employed in high paying WS jobs with big bonuses.
It’s just too risky.
I don’t think the OP getting adversarial, avoidant or gamey with his parents is the right way to go.
I suggest he act in an adult responsible manner, and ask his parents about the nature of the loan,
(are parents taking the money out of their retirements, etc.). He should ask about their repayment plan terms.
He should not take a loan from them in bad faith with the intent of not paying them back.
He should think carefully about what a huge debt will mean to him as a young working person.
And if he has problems paying back the money, how will that impact his parent’s future if they need the funds,
and how will that impact their relationship.
Perhaps it is a doable as some suggest, but the point is to go into the situation in an open honest adult
way, have a frank dialogue with his parents and having done a good cost benefit ratio.
This. A National Merit finalist with a 4.0 should be able to get a full scholarship to a great many very good schools. The Ivies tend to prioritize students who have financial hardship, making wealthy students pay full freight so they can offer steep discounts to those from less elite backgrounds. However, there are other schools out there (non Ivy privates and top SLACs) that I’m sure would offer the OP lots of merit aid.
Personally, I don’t understand why parents who make a lot of money (so much that their kid doesn’t qualify for financial aid) won’t pay for an opportunity like Penn.
OSU is not worth 60k in loans. I’m surprised that the OP didn’t get a better scholarship there. But I’m guessing that this low-ball offer also had to do with the parents’ financial standing. Schools like OSU like to seek out people who will be able to pay full freight. In any case, the OP can do better.
@eric45 Here are my thoughts on your situation. My husband and I are probably in a similar financial position as your parents. I saw you post on one of your threads that your parents are “awesome”. I will conclude that you have a good relationship with them. I suggest a sit down, no distractions conversation with them ASAP.
Share your concerns and ask them to share their thoughts.
In our situation we always communicated to our children (1 son, 1 daughter) that we would pay the EQUIVALENT of a full ride (4 yrs) to our state flagship. Depending upon their choice, they could possibly graduate debt free…BUT they would have to apply themselves in school, because the “free ride” ends after 4 years. We also gave them an incentive. Any merit-based scholarships they earned would be theirs upon graduation. In the event they chose to attend a ‘higher cost of attendance’ school, they would be responsible for making up the difference. We thought this arrangement was reasonable. (My husband and I both had hard-working, middle class parents who paid for our undergrad degrees at our state flagship.)
Anyway, I share this, because maybe your parents would agree to a similar arrangement. Instead of making you responsible for the full $240K, perhaps they could have you pay them back the difference between UPenn and your state flagship.
I believe most parents want the best for their children. They must have reasons for their current stance. I speculate something in their own upbringing OR something in your past actions is at the root of this conundrum. I find it difficult to believe that ‘awesome’ parents of their means would put this kind of financial burden/stress on their child…even if said child is looking at a sizable inheritance in the future.
Talk it out and good luck!!
If this student is a NMF, then this year is the ONLY year he could get the big NMF award. Declaring the number 1 school to NMCorp has a May 1st deadline…so very soon.
There are schools, including Alabama, that would allow him to apply today, fax his #1 choice to NMCorp by May 1st, and would give him their big award…for this fall 2015.
I have thought long and hard over the decision, and I have chosen Penn!
Thanks for all your advice guys!
So you are going to borrow a quarter of a million dollars over 4 years from your parents to pay for Penn?
And then what - pay them $2k per month for over 10 years?
Congratulations, @eric45 - best of luck to you!!!
Congratulations @eric45. Have a real talk with your parents about the loans before you sell out completely. I made a deal with my son that I would pay for a full 4 year degree in state or at an Ivy. I also told him if he wants to go to a spendy 4 year LAC or NYU, USC type of school I’ll loan him the difference. I can afford any of these but I want him to make a rational economic decision. I also told him that he would only have to pay me back $500 a month and not until he turns 30. I graduated debt free on my own from a highly ranked state school then unfortunately went $120k in debt for grad school. It has paid off many times over for me in the long run but it absolutely ruined my 20’s. You DO NOT want to have $2000 a month payments in your 20’s when you need a car, might want to get married, buy a house etc… Massive student loans even owed to parents will be a dark gloomy cloud that will suck the life out of you.
You need to find out from your parents how much that money matters to them. Is it going to significantly impact their retirement if you can’t pay it back? It could wind up ruining your relationship with your family.
@eric45 have you calculated the numbers on this:
Average starting salary for Wharton BBA $63K
Take home after taxes: $45K/yr
Total remaining after annual loan repayment: $21K/yr
If your salary increases by (optimistic) 100K after 5 years with a take home of $65K you will still be paying over 1/3 of your income for loan repayment.
Have you thought about going for a cheaper, in-state alternative and then going for Wharton for grad school? You’d be able to pay back your (smaller) loans in only a few years.
@gluttonforstress & @TooOld4School - May 1 was two weeks ago, and the OP posted his decision four days ago. Your advice, however well intended, is no longer relevant. The decision has been made. Wish the OP well, and save your Monday morning quarterbacking for next football season.
Since the loan is to the parents, and the amount is ridiculous, if the student finds himself unable to make adequate payments, then if the parents get burned, who cares! They were stupid enough to offer this silly deal.
I hope they do get burned. Seriously! ( I don’t care if that sounds mean! )
You and your family are going to regret this level of debt the rest of your lives! Seriously! It is one thing to have the money to pay, another thing to dig a very deep debt hole for UG! In Math? Seriously? I see where you were accepted to many wonderful schools - so you have high stats. Shine at OSU with the in-state tuition and the $6K scholarship! You then can proceed to a name graduate school w/o the ridiculous debt.
Even though you are high stat, you are not thinking about the consequences of the debt. And your parents are caving to you on this. Are they sacrificing retirement money to finance your scheme? Do you have younger siblings to consider?
Somehow you think you will magically earn a really high $$ amount and be able to pay back the student loans with a big shovel. This is very, very, risky thinking. You will be sacrificing a lot over the years after your UG and regretting your foolishness. Then you will be mad that your parents allowed it to happen.
Or maybe after a year at Penn, they will say, enough is enough. Then you complete your UG degree at OSU w/o the scholarship money there.
Can’t students still cancel their acceptances (probably lose their deposits), take a gap year, and reapply if no other schools will take them this year?
Congratulations, OP. Good decision.
Never know, may have said one thing and still done another…