<p>Really excellent points blossom and part of why my grad DD is taking loans. She and I differ in spending habits and I don't want to think about her, I just want to enjoy her. If I gave her money it would be a sacrifice for my lifestyle, and I do not want to resent my sacrifice when I see her spend on something I would not. Much better to let her owe on loans and if I am able pay them later, I feel no financial "interest" in her decisions, a relief after 4 years of UG</p>
<p>Blossom, you were spot on. I didn't realize it at the time but my "loan" was a lot about parental control. Very good issue to bring up. I only realized it later...too late, really. Mine came down to, "how can you move out when you owe us money? That needs to come first". Am much smarter now.</p>
<p>Yay, Blossom. It's often the inferred guilt about spending that makes family-sponsored loans uncomfortable for the borrower.</p>
<p>Yet...my kids charge each other interest on money lent. There's nothing wrong with learning that there is a cost to money; whether it's from a third-party lender or a family member. I would charge my kids a fair interest.</p>
<p>We paid fully for D's UG and yes, I loaned money for my D's grad school at no interest for the first year to supplement her Stafford loans. For the second and final year, she is taking a Grad Plus loan to supplement her Stafford loans. We want her to have loan repayment in mind when she graduates next year.</p>
<p>Mathmom, I really like the idea of charging a little interest and then giving it back for a down payment on a house (post #38).</p>
<p>I wish we could afford to lend D the money she needs for grad school and do this for her.</p>
<p>I may also be in the minority here, but if my daughter decides to continue on to grad school, I think I would charge interest if she asked for a loan.</p>
<p>There's a few side items here: </p>
<p>1 ) She's carrying much of the financial load of UG in an emotional sense - she's not going to the school she really wanted to due to her receiving a 100% merit scholarship to the school she's now attending. We're paying all of her other fees, so she'll graduate with zero debt. Her preferred school does not do merit scholarship, and she did not qualify for FA, so the $150k difference (net!) drove where she attends.</p>
<p>2 ) She gave up this summer to take an additional course to set herself up for a 4 year combined BA/MS program at her school. We covered the full cost of this (summer courses are not in her scholarship), so you coould argue we're already going to be paying for her MS degree (assuming to ultimately completes the dual program).</p>
<p>3 ) End of the day, I feel grad school should be either (a) self-financing [via appropriate major / school selection], (b) valid for entry into a high enough paying field to cover the loans to get there, or (c) of sufficient personal value to the student to make the cost worthwhile.</p>
<p>Your grad school attending child is an adult in his 20s. At some point, he needs to enter the real world.</p>
<p>George</p>
<p>I would charge a modest amount of interest. I've borrowed money from my own dad a couple of times, and we agreed on an interest rate that was A) lower than I would get from my bank but B) higher than he would be paid if he invested it in a certificate of deposit. We both felt like it was a fair deal.</p>
<p>After they've got an undergraduate degree, I believe paying for grad school is the student's responsibility. So if my kid can't afford to pay for grad school out of pocket, she's going to need a loan from somewhere. If the Bank of Mom will give her a better deal than a real bank, that seems fair. </p>
<p>By the time both my kids have finished a bachelor's degree, I'll be 52 and they'll be mature adults. At that point, I need to focus on my retirement savings and they need to be fiscally independent adults.</p>
<p>I wouldn't charge interest to my kid for grad school. On the other hand, if I borrowed $$ from my parents to go to grad school, I would not try to make them feel guilty if they did charge me interest.</p>
<p>I don't see anything wrong with charging interest. Son has the choice to not accept the loan and look elsewhere for the money. Did Son ASK for the money, or did Dad make the loan offer on his own? ("Hey Dad, I'm staying in school for 2 more years. Here's the tuition bill of $xxx" or "Son, I understand your desire to go to Grad School. How about I provide the loan at 6% interest?")We've told both of our kids that Undergrad is on us (for which they are totally grateful) and that anything further is on them. I'd like to think that if we offered a loan with interest, they'd be happy for any offer at all. You can always "forgive" interest and/or principal payments in the future if you feel like it....or not! Who knows what your financial future, or theirs, holds?!</p>
<p>Parental loans often come with strings attached (my favorite: down-payment for the condo, but your BF can't move in). As my grandmother used to say, "with my money comes my mouth." Since accepting the mouth is the cost of doing business with the Bank of Mom, I'd be reluctant to charge interest to boot. I would, however, that at some pooint inn the future I would be in a position to forgive at least a portion of the loan.</p>
<p>blossom and foolishpleasure...both your posts highlighted why I have always been glad that I went it on my own after undergrad. Didn't borrow a down payment or other funds from the parents on either side. Saw others go down that path and didn't like the results...
3togo..in your scenario which relates to helping with a real estate purchase, I have seen cases where that becomes very problematic when later on the loan is more than the place is worth...Now more than two people have to decide whether to sell at a loss. Complicates things.</p>
<p>You have a successful son by most standards, who is graduating college and is now going to grad school, and it's somehow prudent to charge interest? So instead of focusing on his studies, he will need a job to pay off money to his parents?</p>
<p>My mom made below poverty line and for parents to make money off their son to "teach him responsibility" -- in this bad economy, when they're lucky enough to have the resources to even pay for his college in the first place -- is honestly one of the most ridiculous things I've ever heard.</p>
<p>If you choose not to lend money at all, I think that's a perfectly appropriate decision to make. He's an adult and it's not his money. But interest?! If he wants to get a loan with interest, I don't see why he doesn't just get one from a bank. The prime rate is 5% right now. :/</p>