Make our kids take loans and pay them at the end as surprise, good idea?

[Anonymous]

We had our son take out small loans - stafford - and told him he needed some skin in the game. Which he rolled his eyes at as a straight-A student, but did it. We actually wanted him to take them out because it was free money (until the moratorium) ends and there is a possibility of dems forgiving loans - so again, free money . Once we have to start paying interest on them we will just pay them off. So I get your sentiment but if you want to incentive your kid it might be better to say you will pay but if he gets a C (or whatever) he has to pay you back for that class. If the kid is prone to f-around, theoretically having loans to repay will probably not penetrate their frontal cortex at this point anyway.

[Anonymous]

I mean given your critical thinking skills, it appears that your kid is bound for Community College so paying it off wouldn’t be quite the flex you are hoping for.

[Anonymous]

Anonymous wrote:We had our son take out small loans - stafford - and told him he needed some skin in the game. Which he rolled his eyes at as a straight-A student, but did it. We actually wanted him to take them out because it was free money (until the moratorium) ends and there is a possibility of dems forgiving loans - so again, free money . Once we have to start paying interest on them we will just pay them off. So I get your sentiment but if you want to incentive your kid it might be better to say you will pay but if he gets a C (or whatever) he has to pay you back for that class. If the kid is prone to f-around, theoretically having loans to repay will probably not penetrate their frontal cortex at this point anyway.

I don't understand the "if he gets a C he has to pay you back". My kid graduated in 4 years, switching majors after first year (had 1 C in original major and a few Ws--hence the switching of majors) , and even had 2 Cs in their actual major. But they graduated in 4 years with a 3.4+ gpa and started a good job immediately. The lower grades were not due to lack of effort or goofing off.
If we had said, "you have to pay back anything below a B" they would have really struggled and it wouldn't have meant better grades, but it might have meant the kid getting lost/sidetracked and never graduating college or us killing their self-esteem. So just choose carefully how you approach it.

[Anonymous]

Some odd people on this board.

[Anonymous]

Anonymous wrote:We had our son take out small loans - stafford - and told him he needed some skin in the game. Which he rolled his eyes at as a straight-A student, but did it. We actually wanted him to take them out because it was free money (until the moratorium) ends and there is a possibility of dems forgiving loans - so again, free money . Once we have to start paying interest on them we will just pay them off. So I get your sentiment but if you want to incentive your kid it might be better to say you will pay but if he gets a C (or whatever) he has to pay you back for that class. If the kid is prone to f-around, theoretically having loans to repay will probably not penetrate their frontal cortex at this point anyway.

My parents did a version of this, had me take the federal loans out and told me if I didn’t make dean’s list, they wouldn’t pay them off. Worked perfectly for me, there were a few semesters I didn’t make Dean’s List (I know, all of you reading this probably would’ve disowned me) but I left college with minimal debt and paid the loans off quickly.

[Anonymous]

Very dumb.

[Anonymous]

Anonymous wrote:We can fully fund 6 years of private college for our kids but may not tell them and claim that we are broke and they need to take out loans.

Has anyone done this, or is it crazy?

DH basically wasted 1 year of school because he knew his parents would pay for it, so I wonder if this is a good idea.

You'll end up wasting interest. Also, not sure if that would be motivation enough for kid to do well. What if they still drop out? Are you not going to rescue them and payoff the loan?

On the assumption that you know your kid, if they are not hard working and/or high achieving - Go instate. Far cheaper. You can always send them to a fancy 'finishing school' for Grad and afford to pay for it. Make your kids take out the $5500/6500 Unsub/Sub loans. Those are nominal and the majority won't accrue interest during school. Even if they have to carry the whole thing (less than 30K), it won't be a huge burden.

[Anonymous]

Anonymous wrote:Sounds manipulative, sneaky and creepy. Unless you have manipulative, sneaky and creepy kids I would never do this.

+1

A kid who will do well, will do well whether or not he has loans.

Manipulative and dishonest.

[Anonymous]

We had our child take out the Federal Student Loans and said we’d reimburse it if they got Cs or above (I thought about Bs, but honestly Cs get degrees, so why belabor the point when the objective is graduation not control).

The entirety of private college tuition is kind of where you are losing me. I think you have too much “surprise” in this plan.

[Anonymous]

Anonymous wrote:Have them take the full amount if the federal subsidized loans. Make them pay that off. That’s “skin in the game” without interest accumulation until graduation.

They won’t qualify for a subsidized federal loan if the parents have money. Honestly don’t give advice on topics about which you are so obviously ignorant.

[Anonymous]

Anonymous wrote:We can fully fund 6 years of private college for our kids but may not tell them and claim that we are broke and they need to take out loans.

Has anyone done this, or is it crazy?

DH basically wasted 1 year of school because he knew his parents would pay for it, so I wonder if this is a good idea.

Just be upfront about what you are willing to pay and what they are responsible for paying - no games. First, to get the federal loans the student will need to fill out FAFSA, and while there is a way for you to enter your info, the final EFC will go to the student. Second, you won’t qualify for subsidized loans, only unsubsidized so between those two things it will be obvious you aren’t broke.

In regards to wasting time because they know parents will pay you can say to your kids that you only pay if they keep their GPA above x and they add you to get a copy of the grades. I have a classmate whose parents were millionaires and when they messed around in school the parents said absolutely not. The family said they had to leave the expensive school to live at home and go to school in state. In the end it was a wake up call - the classmate did have to transfer but begged the parents to be allowed to live on campus at the school and they really turned it around.

[Anonymous]

Anonymous wrote:No, your kids don't need undue stress from loans.
They're adults now, treat them as such.

Just tell them if their GPAs drop below a threshold, they are off college fund.

This. And have them be responsible for making their own spending money.

[Anonymous]

My parents did a version of this but a normal version that wasn’t weird and sneaky. I decided to go to grad school and they were clear I was on my own. With that information, I chose a program that was reasonable for me to repay. My dream program was 60 grand a year or so but I found a program that had parallels that was about 20 grand a year or so. Took out loans, paid some in cash, just made it work. I left and paid my monthly installments for about a year. Then when my mom sold her business, she told me she wanted to use some of the proceeds to clear my loans. Beyond generous. I could’ve afforded my choices on my own, though so ownership was important.

[Anonymous]

Anonymous wrote:My parents did a version of this but a normal version that wasn’t weird and sneaky. I decided to go to grad school and they were clear I was on my own. With that information, I chose a program that was reasonable for me to repay. My dream program was 60 grand a year or so but I found a program that had parallels that was about 20 grand a year or so. Took out loans, paid some in cash, just made it work. I left and paid my monthly installments for about a year. Then when my mom sold her business, she told me she wanted to use some of the proceeds to clear my loans. Beyond generous. I could’ve afforded my choices on my own, though so ownership was important.

I’ll add I was in my late 20s with a baby on the way. So I have certainly demonstrated that I was a competent human who could land on my feet. I don’t think anyone was trying to force a lesson on me.

[Anonymous]

They should be figuring out how to pay for college themselves. And then they should pay it themselves.