Pay for college or borrow?

amother

Wed, Sep 21 2022, 7:39 am

I don't want this thread to get political please. I'm just looking for practical advice going forward.

My DD just started College. originally the plan was for DH and I to split the cost with her and pay as she goes along. Since the student loan forgiveness last month, we've all agreed that it's best to borrow the money and hope and wait for it to be forgiven.

Does this make sense? Is there any downside to this plan other than the small interest?

NotInNJMommy

Wed, Sep 21 2022, 7:48 am

I would strongly suggest you review the criteria for student loan forgiveness. It is not what many people think it is.

Also, the rules could always change.

I would not take on debt, especially at dd's expense.

amother

Wed, Sep 21 2022, 7:55 am

NotInNJMommy wrote:

Exactly, the rules always change. That's why your first point isn't that relevant. Regardless of what the criteria is now, it might be different in a yea or two.

I agree with you about taking on debt. By I would feel terrible if we worked hard to pay it off now and then be disqualified if the loans are forgiven. I just don't know what to do.

NotInNJMommy

Wed, Sep 21 2022, 8:13 am

amother OP wrote:

The fact is, you need to work for a qualified employer (or your dd for that matter) while making all payments for ten years before a portion may be paid off (among other things).

That's ten years to wait and pay interest and that's if she's working for a qualified employer for that duration too.

It's a lot of risk.

NotInNJMommy

Wed, Sep 21 2022, 8:20 am

amother SandyBrown wrote:

I thought this was a one time thing. Have you heard any rumors that they plan on doing this again?

oh right. the one time thing.
FYI it's only 10-20K depending on some factors and there are income requirements.

I think it's a risky game. I also don't want my kids starting out with debt habits.

amother

SandyBrown

Wed, Sep 21 2022, 8:22 am

NotInNJMommy wrote:

I think you're talking about something else?

There's always been loan forgiveness if you work for certain qualified public sectors.

This new loan forgiveness is not related to that. Besides for the current loan forgiveness, the guidelines changed that you only need to pay 5% of income instead of 10%, and if you are making under a certain number (depends on family size) you make no payments at all and no interest is accrued.

amother

Midnight

Wed, Sep 21 2022, 8:24 am

You should be able to get a loan and not be charged interest until she graduates. I would do that and by the time she graduates you will have a better idea of whether it’s worth waiting or paying it all off.

NotInNJMommy

Wed, Sep 21 2022, 8:26 am

amother SandyBrown wrote:

The one time forgiveness is capped at 10 or 20k (if eligible) depending on pell grants. How much do you think you're taking out in loans?

I still stand by it would mean having dd take out loans in her name. I don't think it's fair to do to her.

NotInNJMommy

Wed, Sep 21 2022, 8:27 am

amother Midnight wrote:

Depends how much you need to take out. The subsidized loans have limits if the child just got out of HS and is starting college. And I'm pretty sure they go in the child's name.

miami85

Wed, Sep 21 2022, 8:27 am

I would say college loan if it's small. Even if it doesn't get forgiven, it's a better interest rate than a credit card and it could potentially help her build a credit score better than having a credit card.

amother

Midnight

Wed, Sep 21 2022, 8:28 am

NotInNJMommy wrote:

I see no downside to having student loans in your name. It builds credit. And she is the one getting the degree so it is in fact her loan.

NotInNJMommy

Wed, Sep 21 2022, 8:30 am

amother Midnight wrote:

I see no downside to having student loans in your name. It builds credit. And she is the one getting the degree so it is in fact her loan.

You do not need to take out student loans to build credit or to adult.

Ema of 5

Wed, Sep 21 2022, 8:35 am

Regardless of whether or not the loan will ACTUALLY be forgiven, I don’t think it’s a good idea to go into it hoping or assuming that it will be. It’s safer to assume that it won’t be, and then be pleasantly surprised if it is.

amother

Tealblue

Wed, Sep 21 2022, 8:38 am

You should not borrow assuming that the loan will be forgiven.

On the other hand, depending on the terms, why not borrow SO LONG as you would be able to pay it back when the time comes.

So long as she is in school there is no interest payable or that accrues.

My parents had me take out a relatively modest student loan and then they paid it back when it was due but I wasn't stuck with a huge student loan to pay back. They had me borrow because it made more sense to take no interest money while I was in school especially since they were also giving me money during that time for tuition and living expenses.

amother

Midnight

Wed, Sep 21 2022, 8:51 am

amother Tealblue wrote:

My parents had me take out a relatively modest student loan and then they paid it back when it was due but I wasn't stuck with a huge student loan to pay back. They had me borrow because it made more sense to take no interest money while I was in school especially since they were also giving me money during that time for tuition and living expenses.

I did the same. I also worked a part time job while in college. Your college education is yours and it’s perfectly appropriate for the daughter to spend some of her own money on it.

amother

Tealblue

Wed, Sep 21 2022, 8:54 am

amother Midnight wrote:

I did the same. I also worked a part time job while in college. Your college education is yours and it’s perfectly appropriate for the daughter to spend some of her own money on it.

I had a summer job so it wasn't exactly a free ride but my parents didn't want me working during the semesters and they could afford to give me the pittance I might have earned.

amother

Navy

Wed, Sep 21 2022, 9:12 am

My dd is almost done with her Masters.
Debt free.

Dd wasnt eligible for anything. The loans she was eligible for weren't intrest free.

Dh and I helped her out. Dd worked fulltime for most of her college career. College was Sundays and nights. Dd had enough of an income to pay for college and even go on vacations.

The loan forgiveness probably won't apply to my dd since the look at her parents income when it comes to any financial aid.

justforfun87

Wed, Sep 21 2022, 9:19 am

It is a rabit hole better not to be sucked into. Student interest rates are not low at all. Does her career need this degree?

amother

Azalea

Wed, Sep 21 2022, 10:02 am

amother Midnight wrote:

This was my plan. Also wanted to build dds credit and why not have money intetest free for a few years, maybe get loan forgiveness......however, only those income eligible get subsidized loans. Everyone else is left with not such great interest rates and fees. At that point was not worth it. We had savings for this purpose and are using that.