How many of you or your kids are planning on taking out loans?

[Anonymous]

I think there's a big difference between drowning in loans and a small amount of loans.

I graduated college with $20k in loans in 2006. Now, interest rates are higher for student loans than they were then. But I paid something like $100 a month towards my loans and it was totally manageable, and gave me some skin in the game for my education. It's $150 a month now I believe (been on autopay for a while).

Not sure exactly how the numbers would shake out (inflation vs. interest rates and all) but I would want a similar experience for my kids. So even if we could afford it, I would want them to take out a small amount of loans for "their share." I would also expect them to work summers in high school and college to save some money for college, and possibly have a very part time job during the school year, so that they can cover their books (or whatever the modern equivalent is) and spending money.

Part of the college experience is taking control of your own financial future, and you need to start learning to plan, budget, save, pay down debt, etc.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The only difference between loans and savings is time. This is also an article about whether it makes sense to pay for a private degree, even without loans, if you can get a degree of similar value from a state school. The answer depends on the kid and on what you’re really buying, but in a lot of cases the answer is no.

State schools use loans (after pell grants) as a starting point for financial aid. Some private schools use grants to meet need. Her first example is Iowa instate vs Yale and she says Iowa is the better deal. Yale meets all need with grants, Iowa would require loans. She (or the author) is clearly out of touch.

But if you have the money, and your choice is full pay at Iowa or full pay at Yale, you come out of Iowa with a lot more money still in your bank account. If you want to be an accountant in Des Moines, it’s hard to see why you should pay for Yale.

The article was written about people who needed to take out loans, not full pay families

[Anonymous]

Mine won't but I work with low-income students to help them with the college application process and they absolutely need loans, even doing the Cc-->vA state school path. Pell grant and VA state grants help. UVa is good with need aid if they do well in CC but loans are still part of it and definitely a good investment IMO if they stick to the federal student loans limit.

For those low-income kids who are super-high achievers they will do better applying to elite schools that give great need aid but that's a small segment.

A lot of my conversations with these kids is helping them understand how the financial aid process works, the danger of taking too much in loans, and the benefits of CCs. Too many get the message from peers that going to CC means you are dumb.

[Anonymous]

Anonymous wrote:The only difference between loans and savings is time. This is also an article about whether it makes sense to pay for a private degree, even without loans, if you can get a degree of similar value from a state school. The answer depends on the kid and on what you’re really buying, but in a lot of cases the answer is no.

I see your point about loans vs. savings. But taking out large loans as you get closer to retirement age is a bit riskier. If you didn't (or couldn't) save, and all of a sudden take out $100k in parent loans at a 6% rate when you're 50, that's gonna cost you $850 a month for 15 years, and in all likelihood, that money is essentially less money that you're saving for retirement.

I think there is a place for parent loans, particularly if you've had a large increase in income. Let's say you really wanted to save for college, but you made $100k. Your kids are 12 and 16. You managed to save $5k a year since the little one was out of daycare at age 4, so you've been saving for 8 years and have $40k, with some appreciation plus some random gifts, etc, it's now at $60k. You get a raise and, now make $150k. The next two years, you put aside $30k for college, so now you have $120k.

Your kids want to go to schools that cost $50k per year all in. You can cash flow $30k of that. You take $20k a year out of your savings to pay for the rest. You're going to run out of money the last two years. You take $40k in parent loans to cover it ($20k per year). Well, you can just "keep paying for college" for two more years and totally wipe out that debt. Totally worth it IMHO - assuming the educations your kids are getting are worth $50k.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The article says …

That may mean attending a community college for three years and transferring to a better school as a senior.



Who thinks CC is 3 years. Also not all credits transfer. Jeez

um yeah, that's not how it works, at least here. UMD takes 60 credits max from 2y schools. And that doesn't mean that all 60 are applicable to the degree.

My DD just graduated from Montgomery CC and she is able to transfer all 60 credits to UMD. It is absolutely doable. You just have to know what you're doing.

My son graduated from NVCC and transferred to George Mason with 60 credits too. He got some scholarships at GMU as well. He got a "small" loan we helped to pay. No debt. Double!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The article says …

That may mean attending a community college for three years and transferring to a better school as a senior.



Who thinks CC is 3 years. Also not all credits transfer. Jeez

um yeah, that's not how it works, at least here. UMD takes 60 credits max from 2y schools. And that doesn't mean that all 60 are applicable to the degree.

My DD just graduated from Montgomery CC and she is able to transfer all 60 credits to UMD. It is absolutely doable. You just have to know what you're doing.

My son graduated from NVCC and transferred to George Mason with 60 credits too. He got some scholarships at GMU as well. He got a "small" loan we helped to pay. No debt. Double!

For those of you who have kids w/ 60 credits transferred, were they able to graduate from UMD/Mason in 2 years?

[Anonymous]

Anonymous wrote:

Anonymous wrote:The only difference between loans and savings is time. This is also an article about whether it makes sense to pay for a private degree, even without loans, if you can get a degree of similar value from a state school. The answer depends on the kid and on what you’re really buying, but in a lot of cases the answer is no.

I see your point about loans vs. savings. But taking out large loans as you get closer to retirement age is a bit riskier. If you didn't (or couldn't) save, and all of a sudden take out $100k in parent loans at a 6% rate when you're 50, that's gonna cost you $850 a month for 15 years, and in all likelihood, that money is essentially less money that you're saving for retirement.

I think there is a place for parent loans, particularly if you've had a large increase in income. Let's say you really wanted to save for college, but you made $100k. Your kids are 12 and 16. You managed to save $5k a year since the little one was out of daycare at age 4, so you've been saving for 8 years and have $40k, with some appreciation plus some random gifts, etc, it's now at $60k. You get a raise and, now make $150k. The next two years, you put aside $30k for college, so now you have $120k.

Your kids want to go to schools that cost $50k per year all in. You can cash flow $30k of that. You take $20k a year out of your savings to pay for the rest. You're going to run out of money the last two years. You take $40k in parent loans to cover it ($20k per year). Well, you can just "keep paying for college" for two more years and totally wipe out that debt. Totally worth it IMHO - assuming the educations your kids are getting are worth $50k.

Broadly agree, but you’re assuming away the most interesting question, which is whether the education is actually worth $50k. If you can get a degree of similar value more cheaply, whether that’s Princeton with grants or Rochester with merit or community college to Mason, you shouldn’t take out the $40k in loans.

[Anonymous]

Anonymous wrote:In the immortal words of Judge Elihu Smails "Well, the world needs ditch diggers too".

Except that taking out loans is the path towards becoming the proverbial ditch digger… Except in today’s world that translates into needing a thousand side gigs just to make rent. Abd for the truly unfortunate it’s not even to make rent—it’s to bake their student loan payments.

[Anonymous]

Anonymous wrote:

Anonymous wrote:In the immortal words of Judge Elihu Smails "Well, the world needs ditch diggers too".

Except that taking out loans is the path towards becoming the proverbial ditch digger… Except in today’s world that translates into needing a thousand side gigs just to make rent. Abd for the truly unfortunate it’s not even to make rent—it’s to bake their student loan payments.

Not having a bachelors is almost a guaranteed ceiling on earning, going to college gives them a chance to enter the MC and possibly UMC. One of my best friends from law school was probably 200k in debt by graduation. He went to his state flagship on a pell grant and loans and then went straight to law school on loans. He's currently a partner doing securities law at a large firm in NYC. I'd say the investment paid off far more than if he decided he couldn't afford college and tried to go into the trades.