I (she) need(s) to take out a private student loan to get my daughter through the next semester. But I can't decide whether to select deferred interest, pay interest only, or pay principal AND interest. I'm probably giving all of you a financial heart attack by even considering the first two! But this is only the first of eight years of college. I told her that she will have to pay the incremental over a state school, which comes to about $20k per year! So even though this one will be her responsibility, I can't see just letting the interest fester and add up! On the other hand I need to consider my ability to make payments. And the rate is fairly low, about 7%. Ideally I would select deferred payments and then make more payments as able. But I have CC debt to pay off also, currently at 0% but I can't keep that up much longer and it could roll to a bad rate.
I'm having a hard time with this decision
January 6th, 2008 at 04:52 pm
January 6th, 2008 at 05:48 pm 1199641706
January 6th, 2008 at 06:51 pm 1199645503
January 6th, 2008 at 07:33 pm 1199648014
January 6th, 2008 at 10:14 pm 1199657646
How old is this girl and does she have any idea what it takes to pay back $20,000 worth of debt?
Is the career she is going for one that will incrementally increase in salary thru the coming years to pay for this debt PLUS whatever other financial needs she has?
Is there room in YOUR budget for this debt PLUS the debt you already have AND your current expenses AND your & your wife's retirement plans?
Do you have to say yes to Ivy League?
What about living at home and going to a smaller less prestigious college but that is more affordable?
I guess the HARDER question I'm asking is more on the ground floor level. Is this a DEDICATED student with a burning passion for her major, or is she a 'so-so' student who is only going to college because a)Mom & Dad want me to, b)P.A.R.T.Y. w/my friends or c)it's the only way to marry the $$earning mate of her dreams or d)I've GOT TO be a scientist??
To me, IMHO, any answer other than D would not require Ivy League, and even then the question about future earning potential in her field would make me question debting for it - either in my own name or hers for Ivy or even for State U.
Have you made financial promises to your daughter?
uhhhh....just some thoughts...maybe food for thought...really, none of my business...(ducking now!) :0
January 7th, 2008 at 12:51 am 1199667086
And no, I doubt she really knows what it will mean to have massive debt on graduation.
January 7th, 2008 at 02:50 am 1199674227
You're looking at what -- 80k in debt for an undergraduate? If her term hasn't started yet, you have a little time to decide, but remember, it's not going to matter where she had her first year, if she doesn't finish there as well. So if you're just doing it for one term, you may as well not do it.
Just the principal is the equivalent of a full year's salary, and she'll be paying that when she's ready to buy a house, get married, start a family, and she'll be doing it at the start of her career (when she's at the entry level salaries in her field.)
If her grades are good, she'll be able to get into the grad school she wants, and with a lower debt load.
It's like this: if you can't really afford the college now, as a freshman, you're betting on 2 things: first, that she's actually going to make the most of this education and second, that it'll put her in a place where she can pay it off. But if you're looking at over 100 k for your total educational program, then it's really important to know if the potential career field will pay off. It sucks to have a student loan payment that's so high it explodes any financial stability into pieces, and you're not even 30 years old.
I mean, maybe if and she's going for engineering or nursing: a good paying job that only takes 4 year's education, then that's one thing.
But if she's premed, dent, law, wants to be a college professor or anything like that, where a 4 year degree just isn't enough? Then you should definitely talk to someone at the graduate school where she's looking to go, and ask about their incoming student profiles.
You'll probably find that it's the grades, not the location of the undergrad degree, that makes the day. And if that's the case, save the $$ for her graduate school, send her to the local college and make sure she works her ass off.
Honestly. There are too many pre-meds turned secretaries and English grads working at Starbucks (no offense, cause I tried to get a job there myself) and there is a special kind of misery reserved for the overeducated, underpaid, and uptotheass in debt.
It sucks, but you might be better off sitting out a term until you both figure out what the best overall game plan is. In any case, definitely talk to someone at the grad school to find out what they're really looking for before you sign anything. Not someone at the undergrad. Call grad admissions and see what they say.
January 7th, 2008 at 10:08 pm 1199743700
Are you sure she is committed to finishing her education? so many time I have seen parents take on debt for their children then they drop out of school or stop attending and parents are left with the debt. It is always better for the child to take it out then the parents can help along the way. Also, if she takes it out there are usually no repayment issues until she is out of school.
And once she becomes a junior (in credits) she is eligible for more federal none private assistance. Assistance is limited in the first two years because of the high quit rate. the federal gov limits it to limit there hit on those who do not repay loans.
I am one of those with a high debt load. 80K for undergrad is serious money and if she needs a grad degree in some way to succeed in her final career that is more debt to take on.
As a former financial aid counselor and then as an administrator of a masters program, I guarantee you it is grades and letter of rec that really make the grade in terms of getting into grad school, not the undergraduate college. I heard all the time, "but I went to (insert Ivy league here) and I was not accepted? Why?" and the answer was, "your grades were not even close to those who attended other, non ivy schools." She needs to excel where ever she goes.
Why does she not go to a public school? I understand a parents desire for a child to go to the best they can, but not to the detriment of the parents future. You can always borrow for school, retirement is another story.
Good luck with the decision.
February 5th, 2008 at 05:42 pm 1202233373
Community colleges for the first two years are an awesome deal; online courses cost the same as traditonal lecture courses. Check out tuition rates at Virginia;s community colleges.