<p>I will be attending UIUC in the fall, and my parents and I have been talking about how best to pay for my education. While borrowing money from my parents has never been an option(they have 10,000 dollars set aside for each of my four years), I recently learned that my uncle fully financed my cousin's education with the expectation that my cousin would pay him back. However, my cousin has decided to pursue religious interests, and so my uncle is out 80 thousand dollars.</p>
<p>So would you be willing to give your child a loan with the expectation they pay it back? I see two problems with this. If it's a no interest loan, you lose money due to inflation. If it's a minimal interest loan, you lose money because you could have invested that money elsewhere. And 140,000 dollars invested can bring in quite a large return. If you charge interest at just below the norm, you're not doing your child much of a favor.</p>
<p>I guess I would not loan money. I would either give it to them or have them get a formal loan to payback. Just too much emotion and strings attached otherwise.</p>
<p>Basically it depends on the family’s financial situation. I wouldn’t loan money to my children that I expected to get back, therefore it would be a gift and not a loan. If all I could afford is $10k/year that’s it and they would need to borrow the rest on their own or lower their sights and spend less. Since we were fortunate to be able to afford it we spent the extra $31k++/year that top private cost above State Flagship. After graduating last year S1 has an excellent job, all his options open, and no debt. We are just older but not worse for wear.</p>
<p>There are many factors to consider and each family is different. I would consider my child an investment, so the interest factor is not really a consideration. Most parents realize having children is an expensive undertaking, but choose to have them, because children are very satisfying and they are our legacy. If I had the money to spare, and if the child/student was serious, I would rather pay for college outright with no expectations.</p>
<p>@marybee333 I think that if any parents had the money, they would be completely willing to pay for their child’s education. I was more questioning your(not you specifically) current situations. The typical family can’t outright pay for their children’s educations without a huge loss.</p>
<p>ColonelSanders- some parents are willing to take out loans to help pay for their kids’ educations. If parents have decent incomes, they are more able to pay it back quickly. Students might also take out small loans, and work during breaks to make up the difference. It usually takes everyone doing a part.</p>
<p>I borrowed money from my grandparents to pay for graduate school. I also borrowed money from my parents for a downpayment on a house. I paid them back. It took time, but I repaid every penny. There was no formal written agreement, but I couldn’t have lived with myself if I hadn’t repaid them. BUT, I’ve loaned money to other family members and have not been repaid. My kids have never asked for a loan (we’re paying for college as a gift), but if they ever do, I will hope that they respect me enough to repay it.</p>
<p>I don’t believe in lending money to family members. If I could afford it and wanted to do so, I would just give the money requested as a gift. If the recipient paid it back, great. But I’m not in the banking business and I want to have peace with my relations.</p>
<p>If your parents are co-signing your college loans, in essence they are lending you the money and are on the hook if you don’t pay it.</p>
<p>There is a saying in our family: If you really don’t want to see a relative ever again, the best way to get rid of them is loan them some money. They won’t pay it back, so they will put in the effort to avoid you.
This is the only reason to loan relatives money.
(This is a corollary of the fact that a loan isn’t really a loan unless you’re willing to either sue them or break their knieecaps if they don’t pay you back. Otherwise, it’s a really annoying-to-everyone type of gift.)</p>
<p>I would if (1) the child needed the money, and (2) only agreed to accept the gift if the parents agreed to accept repayments. In other words, it’s really a gift, but if the child chooses to repay the gift, fine. It’s a sure path to misery to loan anything to a loved one that you really need to get back.</p>
