Is it common for kids to fund their private college education entirely on loans?

[Anonymous]

I have a niece who is attending an instate public and is taking out loans for the entire tuition. Her sister is now applying to colleges which include a few ivies. She is willing to to take out loans to fund the entire $280,000. This seems crazy to me. Do kids really do this?

[Anonymous]

I have friends paying off 100k law school loans 20 years later.
Stanfords and spell grants are one thing. But private loans for undergrad are a racket.

Someone needs to sit youneuce down and look at colfvhard numbers. Your come out with over 400k in debt (because interest in for private loans may compound before graduation). Your repayment coming out of school will be $x a month until you are 45. You want to go in this profession. Average starting salary is $y and your take home is $Z. That means 1/2 of your take home is loans. Out of what is left, a one bedroo apartment is $A. You have $112 left over for car, gas, insurance, food, entertainment. You will need a second job. You will need roomates. You can’t buy a house you may need to wait on having kids. Your life style is poverty level. Etc.

I know so many people who took out these huge private loans with no idea what paying them back would look like. And really regretted it. Making the loan payment dominated every decision they made for years. Marriage, job choice, house, having kids, being SAHM. All decide based on making loan payments.

If it is bad for professional school, it’s ridiculous for undergrad. Loans for a Top 10 law school (but even this is a risk these days) or a good med school only. Maybe a few other specialized grad degrees.

Kids just do not understand how loans play out. Do your niece a huge favor and walk her through it.

[Anonymous]

Anonymous wrote:I have friends paying off 100k law school loans 20 years later.
Stanfords and spell grants are one thing. But private loans for undergrad are a racket.

Someone needs to sit youneuce down and look at colfvhard numbers. Your come out with over 400k in debt (because interest in for private loans may compound before graduation). Your repayment coming out of school will be $x a month until you are 45. You want to go in this profession. Average starting salary is $y and your take home is $Z. That means 1/2 of your take home is loans. Out of what is left, a one bedroo apartment is $A. You have $112 left over for car, gas, insurance, food, entertainment. You will need a second job. You will need roomates. You can’t buy a house you may need to wait on having kids. Your life style is poverty level. Etc.

I know so many people who took out these huge private loans with no idea what paying them back would look like. And really regretted it. Making the loan payment dominated every decision they made for years. Marriage, job choice, house, having kids, being SAHM. All decide based on making loan payments.

If it is bad for professional school, it’s ridiculous for undergrad. Loans for a Top 10 law school (but even this is a risk these days) or a good med school only. Maybe a few other specialized grad degrees.

Kids just do not understand how loans play out. Do your niece a huge favor and walk her through it.

Sorry. This is a mess on my iPhone screen. Meant to say Stafford and spells may be worth it. You get the gist of the rest.

Also, where are the parents. They must make a decent living if need based aid is off the table. Why are they not helping?

[Anonymous]

Anonymous wrote:

Anonymous wrote:I have friends paying off 100k law school loans 20 years later.
Stanfords and spell grants are one thing. But private loans for undergrad are a racket.

Someone needs to sit youneuce down and look at colfvhard numbers. Your come out with over 400k in debt (because interest in for private loans may compound before graduation). Your repayment coming out of school will be $x a month until you are 45. You want to go in this profession. Average starting salary is $y and your take home is $Z. That means 1/2 of your take home is loans. Out of what is left, a one bedroo apartment is $A. You have $112 left over for car, gas, insurance, food, entertainment. You will need a second job. You will need roomates. You can’t buy a house you may need to wait on having kids. Your life style is poverty level. Etc.

I know so many people who took out these huge private loans with no idea what paying them back would look like. And really regretted it. Making the loan payment dominated every decision they made for years. Marriage, job choice, house, having kids, being SAHM. All decide based on making loan payments.

If it is bad for professional school, it’s ridiculous for undergrad. Loans for a Top 10 law school (but even this is a risk these days) or a good med school only. Maybe a few other specialized grad degrees.

Kids just do not understand how loans play out. Do your niece a huge favor and walk her through it.

Sorry. This is a mess on my iPhone screen. Meant to say Stafford and spells may be worth it. You get the gist of the rest.

Also, where are the parents. They must make a decent living if need based aid is off the table. Why are they not helping?

OMG!! Pell grants.

I give up.

[Anonymous]

Anonymous wrote:I have a niece who is attending an instate public and is taking out loans for the entire tuition. Her sister is now applying to colleges which include a few ivies. She is willing to to take out loans to fund the entire $280,000. This seems crazy to me. Do kids really do this?

An Ivy would provide essentially free tuition if parents earn < $150000. If parents earn > this, then they saved 0 for college.

[Anonymous]

I think a lot of people don't think it through. We have friends who are planning on sending their child to a private school (not a good one so it makes no sense when they have good state schools). They had not saved but grandparents put about $40K in a private college plan so they insist on using it. They don't realize that child will have to take out loans for the other 3+ years and it will cost more in the long run. They could cash it out. Child has no concept of money.

[Anonymous]

Yes, people do it and it is not a good idea.

That enormous debt will affect every choice this kid makes for the next 40 years....

It will be hard to get a grad degree.

It will be hard to save for house, retirement, college for her own kids....

Borrowing in-state isn't great, but the level of debt will be closer to manageable.

[Anonymous]

Anonymous wrote:I think a lot of people don't think it through. We have friends who are planning on sending their child to a private school (not a good one so it makes no sense when they have good state schools). They had not saved but grandparents put about $40K in a private college plan so they insist on using it. They don't realize that child will have to take out loans for the other 3+ years and it will cost more in the long run. They could cash it out. Child has no concept of money.

$40k in a private college plan? Why did they bother? If that is all they could put away, they should have used the state's 529 savings plan.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I have a niece who is attending an instate public and is taking out loans for the entire tuition. Her sister is now applying to colleges which include a few ivies. She is willing to to take out loans to fund the entire $280,000. This seems crazy to me. Do kids really do this?

An Ivy would provide essentially free tuition if parents earn < $150000. If parents earn > this, then they saved 0 for college.

I'm guessing they make around $175,000. On that income it's hard to save for college for 3 kids and provide them with a middle class lifestyle.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I have a niece who is attending an instate public and is taking out loans for the entire tuition. Her sister is now applying to colleges which include a few ivies. She is willing to to take out loans to fund the entire $280,000. This seems crazy to me. Do kids really do this?

An Ivy would provide essentially free tuition if parents earn < $150000. If parents earn > this, then they saved 0 for college.

I'm guessing they make around $175,000. On that income it's hard to save for college for 3 kids and provide them with a middle class lifestyle.

On that income, it's pretty certain that she'd get financial aid at an Ivy, especially if she's got a sister in college at the same time.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I have a niece who is attending an instate public and is taking out loans for the entire tuition. Her sister is now applying to colleges which include a few ivies. She is willing to to take out loans to fund the entire $280,000. This seems crazy to me. Do kids really do this?

An Ivy would provide essentially free tuition if parents earn < $150000. If parents earn > this, then they saved 0 for college.

I'm guessing they make around $175,000. On that income it's hard to save for college for 3 kids and provide them with a middle class lifestyle.

On that income, it's pretty certain that she'd get financial aid at an Ivy, especially if she's got a sister in college at the same time.

Newsflash- Ivies are not an option for the vast majority of students.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I have a niece who is attending an instate public and is taking out loans for the entire tuition. Her sister is now applying to colleges which include a few ivies. She is willing to to take out loans to fund the entire $280,000. This seems crazy to me. Do kids really do this?

An Ivy would provide essentially free tuition if parents earn < $150000. If parents earn > this, then they saved 0 for college.

I'm guessing they make around $175,000. On that income it's hard to save for college for 3 kids and provide them with a middle class lifestyle.

On that income, it's pretty certain that she'd get financial aid at an Ivy, especially if she's got a sister in college at the same time.

Newsflash- Ivies are not an option for the vast majority of students.

I agree 100% but the poster I was quoting is specifically judging this young person for applying to Ivies. It's right there in her OP. That is what I was replying to.

If she doesn't know enough about financial aid to know that Ivy's will offer financial aid, it's unlikely that she knows about merit aid and other things that impact tuition at other private schools.

[Anonymous]

Freshman students can only receive a loan for $5500. The rest of the money must come from loans that THE PARENTS must co-sign for. If the parents have some serious debt, they might not be approved. Not a good plan for private schools that typically run in the $60,000 + range.

[Anonymous]

Anonymous wrote:I have a niece who is attending an instate public and is taking out loans for the entire tuition. Her sister is now applying to colleges which include a few ivies. She is willing to to take out loans to fund the entire $280,000. This seems crazy to me. Do kids really do this?

Not at Ivies or comparable schools at the top end. They freely provide F.A. and several (most notably Princeton) won't even agree to process an undergraduate student loan application. There is no need, ever, for any Ivy undergrad who plans well to ever take out one dime in student loans, period.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think a lot of people don't think it through. We have friends who are planning on sending their child to a private school (not a good one so it makes no sense when they have good state schools). They had not saved but grandparents put about $40K in a private college plan so they insist on using it. They don't realize that child will have to take out loans for the other 3+ years and it will cost more in the long run. They could cash it out. Child has no concept of money.

$40k in a private college plan? Why did they bother? If that is all they could put away, they should have used the state's 529 savings plan.

They set it up years ago and probably didn't understand the plan/grandparents. It was very generous of them. They may not have known. I looked it up and you can transfer it to a regular 529 but parents will not listen to me. Child doesn't even want to go but Mom has weird ideas about everything. I told them to go to a state school as child doesn't even want to work/wants to be a SAHM and dabble in things like her Mom so it makes no sense when its not a school anyone has heard of and child isn't looking for a career. I think the bigger issue is neither parent finished college and are doing what is easy for them. They didn't understand why we did the prepaid for our child at birth and now do the 529.