Student loan college decision update

[seriously1]

You guys gave me great advice and perspective here. Thank you.
As of today, dd has received 100k (25k per year) of gift/aid off the cost of her private art school. She has also applied for many small scholarships which are all pending. We are qualified for the direct parent plus loan but have not yet explored private bank loans.

It is looking like 42,000 a year for four years. We have 45,000 in 529 saved and are trying to figure out if it’s best to throw the 529 money directly at this for year one or save some for our son who is 14. We’ve already decided he will live at home and attend a four year college because he wants to go for business and there is one

We think the payments in total would be about 2k a month for ten years to pay this off.

[rooster222]

So it was $67K before scholarship? Eeek! I refuse to take on any payments and fortunately my dd is going to a state school for @ 25K. We didn't qualify for financial aid but she can take a $5500 loan for freshman year which we will have her do. She's responsible for repayment but if upon graduation we can pay it then we will gift that.
We are also waiting on scholarships ranging from $500 to $25K. Before her sophomore year she will apply for a special program that would cover her tuition for the next 3 years. Really hoping that pans out because we have another going to college in 2 years!

She only applied to one out of state school which had the #1 nationally ranked program for her major. She did not get accepted which I was fine with (and so is she) because our state school is top 5.

[seriously1]

Apr 4, 2023 17:41:36 GMT -5 rooster222 said:

So it was $67K before scholarship? Eeek! I refuse to take on any payments and fortunately my dd is going to a state school for @ 25K. We didn't qualify for financial aid but she can take a $5500 loan for freshman year which we will have her do. She's responsible for repayment but if upon graduation we can pay it then we will gift that.
We are also waiting on scholarships ranging from $500 to $25K. Before her sophomore year she will apply for a special program that would cover her tuition for the next 3 years. Really hoping that pans out because we have another going to college in 2 years!

She only applied to one out of state school which had the #1 nationally ranked program for her major. She did not get accepted which I was fine with (and so is she) because our state school is top 5.

That’s awesome! When will she find out about the scholarships? Aren’t they supposed to de use by May 1? She will absolutely pay as much if this back as she can and she is committed to that.

[chpmnk1015]

That's great!

[sadlebred]

Great news about the scholarships, but that is a LOT of money for you to take on. Would you be able to "cash flow" any of the tuition or other expenses to avoid having to pay back loans? Can you afford the payments if someone loses their job?

[seriously1]

Apr 4, 2023 21:04:59 GMT -5 sadlebred said:

Great news about the scholarships, but that is a LOT of money for you to take on. Would you be able to "cash flow" any of the tuition or other expenses to avoid having to pay back loans? Can you afford the payments if someone loses their job?

Yes, but I guess I need to see how the loan works. I like the ease of the parent plus loan because it’s a sure thing. We could cash flow year one using the 529 money too and wait until year two to do the parent loan. ? We definitely both need to be working but she will take on payments too when she starts working. We will also inherit money from both sides of our families down the line and I have a well funded pension. I know it’s risky but I don’t see another way at this point. In a few years I plan to pull my pensions, retire from my current job and start a second career for a double salary too.

[wildrice]

Just be aware that student loan interest rates are high. For example, my H borrowed about 70k for his PhD and by the time he finished and started repaying, they had gained 38k in interest. So 108k in debt, plus they will keep adding interest until they are paid off (thankfully we've been on the COVID pause since his repayment started so that has not happened yet for us... but it will).

I am not sure how parent plus loans work and if they gain interest while your student is in school, but that's something to consider when deciding how much cash you can devote to this. 2k a month for 10 years is a lot - she will be 32ish when this is paid off, how old will that make you? Will there be other things you want to do with your money by then? What if one of you ends up getting an illness that means you can't work or need to take time off work - will that extra payment be doable then?

You say you don't see any other way, but IMO the other way is picking a less expensive school. This school is probably the most expensive undergraduate school I've ever heard of - I hope they are not preying on the hopes and dreams of young people who may not see a return on that kind of investment.

[k3am]

Apr 4, 2023 14:17:48 GMT -5 seriously1 said:

We’ve already decided he will live at home and attend a four year college because he wants to go for business and there is one

Has he decided this on his own? I'm not sure based on your wording of "we've decided" who the "we" was. A lot can change between 14 and 18. I had NO idea what I wanted to do at 14, and it probably changed 4-5 times before I applied for college. As the baby of my own family, I'd be upset if my options for school were severely limited because my parents prioritized a sibling's very expensive dream school. 

[aprilsails]

I want to hop onto the point which k3am made. You want to be really careful about how you balance priorities like this between kids. We’ve set everything up individually for savings for our kids expressly so we aren’t drawing from one pot of common money which may impact their options. In my own case, my parents education savings for me were wiped out in their divorce. I got $8k total from both parents. Since my sister is much younger and they both got re-established in the interim, she received something in the order of $38k and was able to do a masters. In the end we both had about the same total debt, but she was able to make very different choices than me. I’m not a grudging individual and by the time they were paying for her I had already payed off my loans due to a good job and a rice and beans diet. I recognized that with 7 years between us things were always different.

[jobae1234]

Forgive me if I’m overstepping, but I’m concerned about your ability to pay for your son’s college based on the plan you’re describing. It sounds like you’re going to drain the communal 529 and then be pretty maxed out for the next 10 years?

[ssmjlm]

Sounds like you have two choices.

She gets loans and goes to this school.

She goes somewhere more affordable.


I wouldn’t take on parental debt and I would definitely not prioritize one child over another. Use the 529 to help with books or other student fees for both.

What kind of art school? Is it something that will get her a job that’s commensurate with the tuition costs so she can pay loans after graduation?

[simpsongal]

Apr 5, 2023 13:25:22 GMT -5 ssmjlm said:

Sounds like you have two choices.

She gets loans and goes to this school.

She goes somewhere more affordable.


I wouldn’t take on parental debt and I would definitely not prioritize one child over another. Use the 529 to help with books or other student fees for both.

What kind of art school? Is it something that will get her a job that’s commensurate with the tuition costs so she can pay loans after graduation?

ditto the above

Your framing is very positive re the $100k but that scholarship almost sounds like msrp vs what people typically pay. Coming from families with disparities between siblings, please try to avoid it. Can she take out the loans instead of you? There are loan forgiveness and repayment programs out there and they’re always changing. I know someone with parent plus loans that don’t qualify for forgiveness. Just swim thing to consider.

[k3am]

I've seen a handful of metrics on how much student loan debt is acceptable. Kind of like retirement, where there's really no one-size suits all approach. The top two that I see is that it's ideal to keep total student loan debt below what you anticipate a year's salary to be, and the second that student debt loan payments shouldn't be more than 10% of gross income.

So based on what you outlined above, ASSUMING she graduates in 4 years, that's $42k x 4 years = $168,000, less half of your 529, so ~ $125,000 of debt? Sound about right? According to BLS statistics, median income for a graphic designer is ~$50,000. So her total student loan debt would be signifcantly above that median.

You're estimating monthly payments of $2k/month. On a $50,000 salary, those payments would be close to 50% of her gross (not net) salary. Are you prepared to pay those payments? Is she prepared to live at home to save money or with multiple roommates, and well below her means in order to make those payments.

If this were my kid and this really is her passion and it's this or nothing, I'd tell her what I could contribute (her portion of college savings we'd set aside any anything we could cash flow), and let her know it's up to her to finance the delta. I'd point her to resources about incurring student debt, expected salary, etc. I would not go into tremendous debt to help finance this choice, and I would not pull money away from my other child to finance it.

Could she get an AA at a junior college and transfer in afterwards? That would reduce the financial burden significantly and still get her to her dream school.

[seriously1]

Yes, she will be paying back the loan as well. This is not a gift amount to her.
She is very focused, makes straight As, has worked on this goal most of her life. She has some health conditions, takes meds every day and will require insurance to live. My son is happy go lucky, makes friends everywhere he goes, does ok in school has no health conditions and currently wants to be a u-tuber. They are very different. I feel he will be fine attending a state university here and living at home. It has great programs and he has no idea what he wants to do. I know he will find happiness and success wherever he is. I wish there were other options but she needs a good program and connections for digital animation. The public schools in my state don’t offer this program. I am scared to know I will be throwing money at college debt but I would not forgive myself if I did not do all I could to help her succeed. I know she will also work hard to repay the loans. She has applied to extra scholarships outside of this college we are waiting on and working a job as well.

[wildrice]

Even though you are likely right that your son will be fine either way - he may not see it that way. If he sees you moved mountains to ensure that your daughter could go away to school with a $160k price tag and then he is forced to pick the state school and live at home because there is nothing left for him - that could create lifelong resentment and relationship issues, either between the two of them or with you and his father. Even if he CAN live at home, what if he wants to go away to school? That's a huge life experience that he may want to have. It's one thing if a student just can't afford to go away or chooses to stay home to save money - but to be forced into that choice because his sister had to have an expensive opportunity is not fair to him.

I don't have kids so who knows, but I've been dealing with varying student loan related burdens for 15 years now and we're looking at least another 5 years to pay off my H's loans, so I guess my best advice if you feel strongly that your daughter must do this is to take on as much of the loan burden as you are able, since she is going to be drowning in debt when she graduates if she carries it herself. A high school student with a dream cannot possibly understand what this level of debt truly means to her life right now, but as a bill paying adult you probably have a good idea - so IMO it's up to you to decide if this is something you can give her or if you need to tell her no. Note, I do think SOME debt for her is fine, but I would be careful about her borrowing more than 20-40k herself or she's really going to struggle.

And then plan to take on up to equivalent debt for your son if he decides in the years between now and college that he has a dream too or wants to have a "classic" college experience and needs support for that too.

[k3am]

As I reread your original post in this thread, there was no question asked, you just came to explain that you'll be incurring this much debt. This expensive dream school is the only path forward for her success and there is no possibility of her flourishing besides this program. Good luck to both of you.

Good luck to your son too, who seems to be overlooked in this whole process. But since you're confident he'll be successful and happy with more limited options, everyone's concerns about how your decisions with allocating limited resources are unwarranted.

[jinkies]

I've been typing and deleting all afternoon. Thanks, wildrice , for articulating what I wanted to say in a more diplomatic way than I could come up with.

I also want to note, that if it is possible for her to defer for a year, AND if you are actually able to set aside $2,000/month starting now and for the foreseeable future, the extra year might give you enough cushion to avoid huge loans. With an extra year, you would be able to start with $24,000 banked toward tuition from your $2k/mo contribution. And she would also be able to work for a year to earn money to contribute herself. Combine that with her half of the 529 money, a well paying summer job, and $5-6,000/year in student loans (I think this is the max she can take on herself), you could potentially cash flow the rest by continuing with $2k/month contributions instead of taking on a 10 year loan.

Regardless, I would not be funding any options at the expense of severely limiting my other child's options.

ETA: By doing it that way, you would be done paying for your daughter no later than your son's Junior year. If he also defers (and depending on if he is currently 8th or 9th grade), it could be more like freshman or sophomore year. You could then move your $2,000/mo payments to his schooling. The way you described it, you will have $2,000/mo payments for 10 years just on your daugther's loans, which I have to imagine would leave very little available during the entirety of your son's college years.

[DefenseAgainstTheDarkArts22]

Apr 5, 2023 15:37:10 GMT -5 wildrice said:

Even though you are likely right that your son will be fine either way - he may not see it that way. If he sees you moved mountains to ensure that your daughter could go away to school with a $160k price tag and then he is forced to pick the state school and live at home because there is nothing left for him - that could create lifelong resentment and relationship issues, either between the two of them or with you and his father. Even if he CAN live at home, what if he wants to go away to school? That's a huge life experience that he may want to have. It's one thing if a student just can't afford to go away or chooses to stay home to save money - but to be forced into that choice because his sister had to have an expensive opportunity is not fair to him.

I don't have kids so who knows, but I've been dealing with varying student loan related burdens for 15 years now and we're looking at least another 5 years to pay off my H's loans, so I guess my best advice if you feel strongly that your daughter must do this is to take on as much of the loan burden as you are able, since she is going to be drowning in debt when she graduates if she carries it herself. A high school student with a dream cannot possibly understand what this level of debt truly means to her life right now, but as a bill paying adult you probably have a good idea - so IMO it's up to you to decide if this is something you can give her or if you need to tell her no. Note, I do think SOME debt for her is fine, but I would be careful about her borrowing more than 20-40k herself or she's really going to struggle.

And then plan to take on up to equivalent debt for your son if he decides in the years between now and college that he has a dream too or wants to have a "classic" college experience and needs support for that too.

Yup, I would always look at that imbalance. Plus the sister has medical issues so I'm assuming a disparity in time and attention as well.

If I was that 2nd kid, I'd never express I wanted to go to a different school or more expensive option after watching this just knowing it wouldn't/couldn't happen for me.

I also wonder if you are now strapped for cash for the next 10 years how many little things brother might miss out on. That giant class trip, sorry, don't have extra money. Prom expenses, sorry, no limo, or whatever kids these days spend money on

[seriously1]

Thanks, I will definitely consider all of this. I will also look ahead to increasing my salary etc taking on debt is scary but I also know I wouldn’t enjoy a more wealthy lifestyle if it meant my kids didn’t get to reach their goals.

I guess I don’t see fair as you get the same but fair being you get what you need. My parents helped my brother more than me but he needed more financial help than I did and I’m ok with that. My son shows no signs of feeling like he is wanting for anything. He is living his best life now but I do wish he would work harder at his grades and less at his social life!

[k3am]

This thread is so frustrating. I don't know why I keep coming back to it. Our country, and MANY posters on this board, are crippled by student loan debt. It's one of the reason they're trying to get student loan forgiveness, because the weight of student loan debt can be a lifelong burden. There are some careers that may warrant more debt, some that might, some that don't. I am not the judge of that, but it feels like you're just glossing over that and the advice others have given.

[VillainV]

$2k a month for ten YEARS?!?!?

Wow. I just….wow. It’s nobody’s decision but yours. I would not be able to pay that. If you can, then I guess, go ahead.

[sadlebred]

Apr 6, 2023 15:20:11 GMT -5 k3am said:

This thread is so frustrating. I don't know why I keep coming back to it. Our country, and MANY posters on this board, are crippled by student loan debt. It's one of the reason they're trying to get student loan forgiveness, because the weight of student loan debt can be a lifelong burden. There are some careers that may warrant more debt, some that might, some that don't. I am not the judge of that, but it feels like you're just glossing over that and the advice others have given.

I'm with you on it. If it were a career maybe like software development or something where you can earn six figures a few years out of school maaayyybe. Another way to think about this, it's MORE DEBT than a DOCTOR (MD/DO) would probably have. It's more than my entire 4 years of university here in the US.

[DefenseAgainstTheDarkArts22]

Apr 6, 2023 19:15:36 GMT -5 VillainV said:

$2k a month for ten YEARS?!?!?

Wow. I just….wow. It’s nobody’s decision but yours. I would not be able to pay that. If you can, then I guess, go ahead.

I had the amount in my head as "you could buy a house with that" money but when you put it like that it hit me that she could legitimately buy her daughter a house for that!

[VillainV]

Apr 7, 2023 13:10:51 GMT -5 DefenseAgainstTheDarkArts22 said:

Apr 6, 2023 19:15:36 GMT -5 VillainV said:

$2k a month for ten YEARS?!?!?

Wow. I just….wow. It’s nobody’s decision but yours. I would not be able to pay that. If you can, then I guess, go ahead.

I had the amount in my head as "you could buy a house with that" money but when you put it like that it hit me that she could legitimately buy her daughter a house for that!

I can understand someone wanting to set their child up for a successful future, and if they have the means to do that, I guess it’s not really any of my business. It just seems like SO much money for a very specific path.

What if after four years of school, the student graduates and can’t get a job? Or decides they don’t want to do that anymore? This is no shade on OP’s kid AT ALL, but I’ve been working closely with 18-25 year olds for about 8 years, and no matter how smart or committed they are, they change their minds about stuff all the time. As they grow and figure out who they want to be and what they want to do, it’s not uncommon to see them do a complete 180 in their life plans because of one experience (positive or negative). It’s exciting that their worlds are so full of possibility. I like to remind them that there’s very little they can do at that age that will permanently close any doors — it might mean taking a different path to get them where they want to go, but there’s little that can’t be overcome somehow. Young people that age SHOULD be exploring their possibilities, opening their mind to new things, and taking some risks in their lives.

But with that much debt. Aside from that fact that my husband and I couldn’t physically afford that level of debt, I would really struggle to deal with spending that kind of money just to have the student maybe change their mind. And I’d hate for the student to think that because of the money, they couldn’t change their mind! I wish money didn’t make a difference, but I know for me it would come with so many complicated feelings.

But maybe OP doesn’t have the same hang ups about money that I do. And if she can afford it, then it’s really none of my business.

[mpm]

Like everyone else, I really question how comfortable those loan payments would be. That’s a lot of money to take out, especially for a career without a high guaranteed starting salary. And if OP was in the very strong financial position that a 2k/month payment would be comfortable, why isn’t there talk of cash flowing some or all of these expenses and why isn’t there more savings available to tap?

I understand the desire to set your kids up for a successful career. But setting your kids up with minimal debt going into adulthood, and yourself for the ability to help them later in life should they ever need it, are also some of the best gifts you can give them.

[mccallister84]

$2000 a month was literally more than my take home pay at my first job out of college. And I was a teacher, making $40,000 a year. It was perfectly sufficient to live on, etc

You are signing your daughter up for a CRIPPLING amount of debt. There’s a reason she doesn’t qualify for this and you need to do it as a parent plus loan.

Do whatever you want but please be sure everyone involved is going in to this with eyes wide open.

[sadlebred]

$2000 is more than most people's mortgage payments.

ML tends to have a higher income than normal, but for us "regular people"--we can't even afford a $2000/month mortgage.

[wildrice]

I guess I'll also note - and I'm not suggesting borrowing 160k for undergraduate school - is that you don't actually have to pay off loans in 10 years. The payment would be significantly less if you did a 20 or 25 year payment plan. I don't know enough about parent plus loans to understand the ins and outs of payment plans, but your daughter at least could also do an income based repayment plan, which currently (IIRC) is forgiven after 25 years of payments. Of course, the concern (for me) with an income based plan is that if after several years of low wages she does end up making good money, the payment will go up and all of that accrued interest will have been added to the loan.

Despite this I am very wary of any 18 year old signing up for 25 years of debt. Obviously some kids have no other option if they want to go to college, but that doesn't sound like the case here.

ETA: As an example, I borrowed about 52k between undergrad and grad school, and on the 25 year plan I was paying $350 a month (not income based). That was not an easy burden when I got my first job making 45k. I remember being so upset when I logged into my loan account after 3-4 years of payments and seeing that I still owed like $49,500. The interest will kill you.

[dcn]

I totally get wanting to do this for your kid. But whew that s a ton of money.

My H had around $75k after undergrad and grad school in loans (he did a 4+1 masters program for physical therapy, before DPT was the standard). His parents also took out parent plus loans. His loan repayments were a big chunk of money on a not huge salary. He ended up joining the military and then applied for a loan repayment program which thankfully he received, and they paid off around $50k. When we were first married I remember our loan payments together were almost $1,000 a month. My starting salary was $34k at a public accounting firm and as a LT in the Army his was probably around the same. It was tight!

His Mom told me that looking back she wishes they had pushed him to go to a less expensive school, at least for part of the time. That it was a real hardship for them to repay, and he had a younger brother too who also went to college.

I guess the only advice I have for the parent plus loans is to put them in only one parent’s name. H’s Dad passed away in 2010 and the loans in his name were forgiven at that point. I know that is morbid to think about, and there’s no way to know what will happen.

[gardengal]

So my aunt & uncle were like you. They didn’t have buckets & buckets saved for college, had normal middle class salaries, had multiple kids, & had an eldest daughter with a dream.

She got into her dream school & had a lovely time. She’s in an arty career so makes enough to scrape by (she does have 2 jobs) but not make loan payments. My aunt & uncle had to tell their son that they wouldn’t be able to support him like their sister. I don’t know if he’s resentful but I do know that his later discovered dreams have had zero support beyond being able to stay rent free at home.

My aunt did confide in my mom she wishes they wouldn’t have taken on the loans for my cousin’s “dream school” & encouraged her to somewhere else. The continual loan payments has impacted their ability to retire & pay for some large, unexpected bills (hvac replacement, unforeseen surgery, etc). They have no breathing room.