Anonymous wrote:

Anonymous wrote:I know someone planning to do this, she found a private loan with a lower rate and no upfront fees (according to her). However there is zero chance of any repayment plan on a private loan, which may or may not be of interest to you.

Why is there zero chance of repayment for a private loan?

I think she means the federal income based repayment or loan forgiveness

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I know someone planning to do this, she found a private loan with a lower rate and no upfront fees (according to her). However there is zero chance of any repayment plan on a private loan, which may or may not be of interest to you.

Why is there zero chance of repayment for a private loan?

PP who wrote before I woke up. Income based repayment plan.

Parent PLUS are not eligible for income driven repayment plans unless you consolidate into a federal direct loan and do income contingent repayment (an antiquated plan that requires higher payments than usually seen on other, newer income driven plans). They do come with forbearance, deferment, and discharge options that the private market won’t offer. Interest rates are fixed 5.3% (though have a 4% origination fee), though there is no underwriting really, only an adverse credit history check that is easy to pass.

But it is true that federal student loans come with fairly generous Repayment (10% of discretionary income) and forgiveness options. Current rates an sub or unsub for undergrad are 2.75% which is a great rate generally and considering zero underwriting. I have no problem with my kids borrowing loans under these conditions. It’s good to have some skin in the game and grow your credit profile with a fairly safe form of debt.

Anonymous wrote:Well if you can pay for college with a loan at a low rate, say under 5%, technically you are making money because your investments should return a bit more than 5%. I plan to pay for my kids college with a HELOC, which right now I can get at 3.5%. Each year I am therefore earning a couple percent spread on my investments. Would be dumb to pay cash

HELOC is, essentially, a sort of way of using your assets to pay, which is what colleges intend, that payment sources would come from a combination of income and assets.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I really hope no one is doing this.

Tons of donut hole families pay for college primarily through loans. Both my parents and DH parents funded our educations this way.
They paid off the loans within a few years of their kids’ graduations.

j

I don’t know how old you are, but things have changed a lot since I went to college. It got way more expensive relative to income and also there are now much more opportunities in need and merit based aid. Two of my kids are in college now, and among their circle there is no one whose parents are paying for college primarily through loans. Some loans - yes, but otherwise it’s savings, cash flow and merit aid, some need based aid too.

Well if you can pay for college with a loan at a low rate, say under 5%, technically you are making money because your investments should return a bit more than 5%. I plan to pay for my kids college with a HELOC, which right now I can get at 3.5%. Each year I am therefore earning a couple percent spread on my investments. Would be dumb to pay cash

Technically, this is true, but it’s likely to become a penny wise and a pound foolish. Same argument that borrowers made about house down payments prior the Great Recession. Supposedly, they were going to make a spread in the market to mortgage rates. Then, the market tanked and house prices declined and many of these homeowners had little equity. Oops!

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I really hope no one is doing this.

Tons of donut hole families pay for college primarily through loans. Both my parents and DH parents funded our educations this way.
They paid off the loans within a few years of their kids’ graduations.

j

I don’t know how old you are, but things have changed a lot since I went to college. It got way more expensive relative to income and also there are now much more opportunities in need and merit based aid. Two of my kids are in college now, and among their circle there is no one whose parents are paying for college primarily through loans. Some loans - yes, but otherwise it’s savings, cash flow and merit aid, some need based aid too.

Well if you can pay for college with a loan at a low rate, say under 5%, technically you are making money because your investments should return a bit more than 5%. I plan to pay for my kids college with a HELOC, which right now I can get at 3.5%. Each year I am therefore earning a couple percent spread on my investments. Would be dumb to pay cash

Anonymous wrote:

Anonymous wrote:I really hope no one is doing this.

Tons of donut hole families pay for college primarily through loans. Both my parents and DH parents funded our educations this way.
They paid off the loans within a few years of their kids’ graduations.

j

I don’t know how old you are, but things have changed a lot since I went to college. It got way more expensive relative to income and also there are now much more opportunities in need and merit based aid. Two of my kids are in college now, and among their circle there is no one whose parents are paying for college primarily through loans. Some loans - yes, but otherwise it’s savings, cash flow and merit aid, some need based aid too.

Anonymous wrote:

Anonymous wrote:I know someone planning to do this, she found a private loan with a lower rate and no upfront fees (according to her). However there is zero chance of any repayment plan on a private loan, which may or may not be of interest to you.

Why is there zero chance of repayment for a private loan?

PP who wrote before I woke up. Income based repayment plan.

Anonymous wrote:

Anonymous wrote:I know someone planning to do this, she found a private loan with a lower rate and no upfront fees (according to her). However there is zero chance of any repayment plan on a private loan, which may or may not be of interest to you.

Why is there zero chance of repayment for a private loan?

Repayment plan. Those exist for federally subsidized loans but not private loans.

Anonymous wrote:I really hope no one is doing this.

We are selling our house instead in this crazy market

And no, we will not be turning down HYPSM. It will pay for itself eventually.

Anonymous wrote:I really hope no one is doing this.

Tons of donut hole families pay for college primarily through loans. Both my parents and DH parents funded our educations this way.
They paid off the loans within a few years of their kids’ graduations.

Anonymous wrote:I know someone planning to do this, she found a private loan with a lower rate and no upfront fees (according to her). However there is zero chance of any repayment plan on a private loan, which may or may not be of interest to you.

Why is there zero chance of repayment for a private loan?

Anonymous wrote:I really hope no one is doing this.

I would rather send kid to CC for two years and have them transfer to 4-year if I was in this situation.

I know someone planning to do this, she found a private loan with a lower rate and no upfront fees (according to her). However there is zero chance of any repayment plan on a private loan, which may or may not be of interest to you.

I really hope no one is doing this.

If you don’t qualify for subsidized loans, and will be paying the majority of tuition from unsubsidized loans, are you just sticking with the plus loans, or have you found a private loan with better terms?