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[quote=Anonymous][quote=Anonymous][quote=Anonymous]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. [/quote]

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. [/quote]

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. [/quote]

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