So these loans are only for students, and not their parents? I’m under the impression that Parent PLUS loans don’t have to be paid back until the student graduates.
Well, that’s fine. I think I owe my kids a better life and to help them get there. If your answer to my questions are “you don’t owe them anything, because once they reach 18, they are on their own” then that’s cool, thanks for your input.
Most are only for the students; the Parent PLUS loan you mention is the only federal loan that is specifically for parents of undergrads, but the interest rates are apparently higher than for the direct-to-student loans, not paying them back until after graduation is apparently an option (but not necessarily the norm), and not every parent can qualify for one.
As the site I linked to above says:
(emphasis mine)
The child is a better risk. Out of college, they will likely get a better paying job than their non-college educated parents and they have a longer wage earning period ahead of them than their parents do.
Hmmm…so anyone with college loan debt has parents that are not college graduates?
Ideally with future income on a loan that isn’t from a school with ridiculous tuition and fees. So, the adult student ought to do a bit of market research concerning the value of a degree in a particular field and the costs to acquire that degree. Unfortunately, financial education in this country is awful.
Around then I went to Cal state and I worked my way through college, my parents provided room and board. I took out one student load- for a truck downpayment. $1500.
No, but many will. And those that don’t, still have more future money making potential than their parents who will likely retire before the loan is paid off.
I’m not sure if you have kids, but this type of financial analysis doesn’t exist in a world of “watching people play video games on YouTube”
My question is more along the lines of “I hear of crushing student debt all the time, but why aren’t their parents the subject of the debt instead of the student”
Do all of our answers help you understand better now?
Correct me if I’m mistaken on this: Up to a certain age for the student, the parents’ financial resources are factored into the student’s school loan eligibility of the student, even if the parents refuse to assist the student.
I have children. I am personally providing them this financial education. Complete with compound interest, opportunity costs, and spreadsheets. I think it’s important for them to be able to understand the financial world including the cost of debt and the cost of wasted time before they are able to sign long term contracts.
What we don’t know is what the future will hold so there is a lot of uncertainty in the job market and what the future value of a degree is. So a state university is perfectly acceptable for us and we have been saving since they were toddlers for the tuition and fees at the state university. We do consider it a family affair as long as the children are putting forth their best efforts as teens in high school. Intergenerational wealth production is our goal. I came from a terribly poor background and I wanted to break that cycle.
Should it be a family responsibility? I have my opinions as I mentioned above but I don’t think it’s my place to dictate how other families operate.
I work in a team of people whose annual incomes are in the $150k-$250k range, and many are two income families with the spouse earning a comparable amount.
Most of my coworkers are not able to pay for their kids’ college out of current income or savings without seriously compromising their retirement security. I can swing it because I started saving for my kids college six years before she was born. And if we had two kids it would be a stretch.
If this is the situation of the upper middle class (I’m guessing 80th to 90th percentile of household income even in this relatively expensive region) what chance does the middle and working class have.
Yes, of course. That’s why I asked. Let’s see if I can sum it up:
- Kids want to go to college
- college costs money
- it’s easier for an 18 year old with no credit to get huge loans for college than their older parents who have jobs and such
- loans for college are predicated on this fact
- after college, parents expect their children to continue to pay for those loans
- this is a normal way of thinking in America
Does that cover it?
Surprisingly, we agree on something.
There’s plenty of horror stories where parents co-sign the loans and end up holding the bag when the student is unable to repay.
Unless you’re able (and willing!) to eat the entire cost of the loans, I seriously recommend against co-signing on any of them, even if your kids beg and scream.
I’m not sure why you think there is one normal way Americans all think.
We paid for my daughter’s college through a combination of savings, Parent Plus loans and loans my daughter incurred. We pay most of it, but we also felt it was in her interest to be financially committed to her education as well.
We had the means to do it. My own parents didn’t and they paid what they could and I took out loans myself that I owed. My earning potential outstripped my parents by an order of magnitude and it would have been the hight of fiscal irresponsibility for them to put themselves so deep in debt and not save for their own future.
Different families make the right decisions for themselves and that is ok.
Pretty much. The idea that “it’s easier for an 18 year old with no credit to get huge loans for college than their older parents who have jobs and such” is predicated on some assumptions:
- Having a college education leads to better earning potential for the student (broadly, this is true, but it’s certainly not universal)
- The government (and, by extension, the nation) is willing to invest in seeing people get educations and, hopefully, have successful working lives
- Placing that large student loan debt on the heads of parents, who are already in their 40s to 60s, would likely lead to poor-to-middle-income parents facing retirement while still paying off their kids’ college education
What if you can’t afford that? Should your kids stay out of school rather than take out their own loans?
Anyway, plenty of parents pay for their kid’s college education, and plenty also pay off their kid’s loans if the kids can’t afford it.
Sorry, I didn’t mean all Americans. I probably shouldn’t have typed that.
But, considering the information I hear about “student loans”, it seems pretty common for students to take the burden of financing their secondary education instead of their parents. Now that I have a child about to start secondary education and another one who will start next year, it just seemed strange to me that these students are carrying so much debt instead of their parents.