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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]"I was just hoping someone might have navigated the loan options and would weigh in.

I recognize I will need to finance it if that’s what my kid chooses. But I won’t do that unless they realize it’s a debt they’ll be on the hook for."

Okay, lots of people here don't know how this works. I do.

The most that this student can borrow for sophomore year is currently $6,500. Junior and senior year it will be $7,500 for each of those years. ANYTHING borrowed beyond this will have to be done by the parent. The parent has two main ways to borrow, the first is using the federal Parent Plus loan that is super easy to qualify for and can be in amounts that are completely out of whack with the parents' ability to repay the loan. A single mom on food stamps can borrow $55K/year to send her kid to Michigan as an OOS student, for example. Now, it would be absolutely foolish to borrow that much money, but the current system allows this if you go the federal loan route. Here is a great article that describes the program and its faults. https://www.nytimes.com/2022/09/17/your-money/parent-plus-loans.html

Alternatively, you can borrow through the private lenders. The terms and rates are often better than with Parent Plus. Keep in mind that these loans are only given to parents deemed to be credit worthy. And in both cases, federal or private, the loans will count against the parents' Debt-to-Income ratio if you need to access your credit over the decades that you're servicing those loans. It will also impact on your ability to take out private loans to help your other students when they go to college. Should something happen and you need to buy a different house, you'll have a hard time qualifying for a loan given how much debt burden YOU are carrying. Your student will not be able to take over that debt burden until they earn enough to be convince the lender that they are credit worthy for that huge sum of unsecured debt. If I were one of your younger children, I'd probably hate your for the rest of your life for screwing me over in favor of the oldest child. Never mind that this oldest child got that big influx of cash as an inheritance and blew it on the expensive school instead of spreading it out over the 4 years to completely cover an affordable school.

https://studentaid.gov/understand-aid/types/loans/subsidized-unsubsidized

[b]This line in what you wrote sends chills down my spine. "I recognize I will need to finance it if that’s what my kid chooses. But I won’t do that unless they realize it’s a debt they’ll be on the hook for." It tells me that you have no idea what you're doing. It is NEVER a debt they'll be on the hook for. It is YOUR debt. There are thousands of examples of kids who promised their parents that they'd pay off the loans the parents foolishly took out on their behalf who don't pay them back. Whether it's because the student doesn't earn enough, gets sick and can't work, has a baby and needs to pay for child care, has a lawsuit judgment issued against them, whatever. YOU are legally responsible for that money and should never agree to borrow the money unless you know that if something goes wrong, you can and will cover the payments yourself, even if that means screwing over your other children and your parents and even your spouse financially. [/b]

You do NOT NOT NOT need to finance it. Very few parents are foolish enough to finance (kick the payment down the field till a later date) something like attending an expensive school. This is essentially a luxury. In any sane person's book, you don't finance fluff. You finance things that will improve your financial standing. The time to belt tighten so that your eldest child could go to an expensive school instead of an affordable one was 18 years ago. You missed that chance. It's gone. Move on.

[/quote]
But the OP can set up an plan that [b]the child makes payments to them starting next August against the loan.[/b]   Maybe they decide that for the 1st 5 years, the student is responsible for 75% of the payment each month and after that they are responsible for 100%.  or something else.  Whatever it is - the child can be required to do something  - and if after the sophomore year if the payments are too much, they can make a choice to transfer. [/quote]

[b]out of what funds is the child making payments to the parents[/b]??????  S[b]he is not employed.  She has no money.  [/b]And FWIW it's the parents that are on the line for Parent Plus loans - not the student.  [/quote]
[b]If the student wants this - really wants this - they get a job.  They go get lifeguard certification training and they work all summer and all year.   With lifeguarding, you know your hours and you can get a 2nd job over the summer.  They can easily demonstrate to the parents that they understand that this is a financial obligation and are committed to being a part of the solution.  
Once they see what it takes, the student can see the work that it takes from everyone to go to this school.  After sophomore year, if it is not something they can continue, the parents only have one year of PLUS loans.  
The student needs to take on some of the financial burden.  This is a compromise that the family can consider.[/b]
[/quote]

errr. right . . . and just how much money do you think this student is going to make after getting lifeguard certification?  Or waiting tables?  Did you not see the comments above about how a summer's earnings are a drop in the bucket compared to the cost of an OOS private? [/quote]

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