College parents - would you consider taking out student loans?

[soccerdad72]

On the chance that President Biden's student loan forgiveness plan gets passed, would you think about having your college student take out loans, even if they didn't need to?

My wife was chatting with someone on her flight home today (yeah, I know - an odd thought ) and somehow they got on the topic of college. We've been fortunate enough to be able to pay for our son's tuition at this point, but the guy suggested to her that it wouldn't be a bad idea for him to take out student loans for the upcoming semesters in case those loans get forgiven in the next few years. An intriguing proposition, especially since if the loans weren't forgiven, we would pay them off for our son anyways, so I'm wondering if there's a downside to considering this.

Thoughts?

I'd love to say keep this non-political, but honestly, I realize that's unlikely...

 

[morgan98]

I guess I can see his point, but I would think the forgiveness may somehow be means tested. Or else why wouldn't every single person take out loans to get their portion paid for?

You can always take them out and pay them off like you said I guess.

Like you said, this is going to probably get political very quickly.

 

[TwoMisfits]

No, b/c I'm sure that whatever the qualifying income level will be, somehow, we'll be $5 above it or one year too early/late.

We have a daughter starting college, and talked about doing it...but then realized that we'd be paying a 1% origination fee plus interest, and likely losing the gamble anyway...

 

[Theta]

What is the interest rate on the federal student loans?

I also wonder if it makes a difference if your student is an undergrad or grad student. My student is going to to grad school in the fall and she completed her FAFSA as independent from us. She doesn't have much to speak of for assets.

 

[Colleen27]

We made it clear to our kids that us taking out loans was a hard no, but honestly, we'd have done it for DD19 if it had been necessary. She's so driven and I have no doubts about her ability and determination to repay anything she borrows that I'd have made an exception to my own rule if it had been the only way to get her to a school that was offering the programs she wanted (she's double majoring in biology & Japanese, which isn't a combination you can find just anywhere and is too rigorous/specialized a course progression to get much out of the way at community college to save money).

I think counting on loan forgiveness is a terrible idea because the workings of politics and bureaucracy are simply too hard to predict. I know so many teachers my age who took out loans based on their eventual qualification for the public service forgiveness options that already exist, only to find it is a lot harder to qualify and actually get forgiveness approved than they thought. So they've been making high loan payments on relatively low salaries for years while trying to navigate a forgiveness process that seems to change with every administration.

 

[neverlandsky]

No college loans especially now days.

 

[soccerdad72]

I guess I can see his point, but I would think the forgiveness may somehow be means tested. Or else why wouldn't every single person take out loans to get their portion paid for?

Perkins loans (I believe) are in the student’s name, so theoretically, the means test wouldn’t apply, but yeah, I wondered about that too.

 

[Skippy918]

I plan to have my kids take out some loans just to have some skin in the game. I want them to be responsible for a portion of their education. I would also like for them to get summer jobs while in high school and internships in college.

 

[soccerdad72]

We have a daughter starting college, and talked about doing it...but then realized that we'd be paying a 1% origination fee plus interest, and likely losing the gamble anyway...

Good point - I was wondering about the fees as well. Admittedly, I haven’t done a lot of research on this yet and my son is going to be on a Co-op in the fall, so he won’t have a tuition payment until spring semester anyways, so I figured we had time.

 

[OKbyme]

All 3 of my kids have the federal student loans. Oldest has had trouble paying them down. She was on reduced hours during this pandemic, she works in nursing home/rehab center. They lost residents and were not taking on new ones. So she deferred them this entire time. Now she is looking for another position and everywhere near here is only offering part time hours. I hope the loan forgiveness is honored, but very much doubt it.

DS was lucky to get a FT position, and living at home, has been trying to pay extra on them.

Youngest is entering senior year of college, will also have the federal student loans. She probably could have gotten away with a reduced amount, but even though she has worked extra hours during this pandemic, she has spent most of the extra money, although she has had to purchase her own masks daily, and had to buy a new desk top for her online classes.

I would NOT advise anyone to take out loans in the hopes they will be forgiven. It was a good selling point, but I do not see it happening, which is why I have encouraged my son to pay them down as much as he can.

 

[mefordis]

If the loan forgiveness happens, the only loans that would be forgiven, I'm quite sure, are those of parents/guardians who make under 75k single, 150k married. That would exclude us for sure. We have the money to pay cash and that's what we intend to do. I hate debt.

 

[spiders]

I guess it all depends on the interest rate to determine if it is worth the gamble.

 

[TwoMisfits]

If the loan forgiveness happens, the only loans that would be forgiven, I'm quite sure, are those of parents/guardians who make under 75k single, 150k married. That would exclude us for sure. We have the money to pay cash and that's what we intend to do. I hate debt.

See, that would include us...which is why I'm sure there will be a lower income limit...or some other "joker" clause, like the kid needs to work in X field for X years, or serve the government in some capacity (military, peace corps, inner city schools, etc)...

As someone said, gambling on political promises is rarely a gamble anyone wins. Waiting to file taxes this year didn't involve any loss, so folks could gamble and wait. But paying origination fees and interest is a loss...

 

[amylevan]

Not going to lie, this is the main reason I’m against student loan forgiveness.

 

[r1lissa]

Nope. I don't typically count my chickens before they're hatched either.

 

[r1lissa]

Not going to lie, this is the main reason I’m against student loan forgiveness.

Agreed. I just paid off my loans this month. I paid on them for ten years and kept paying through the pandemic even though I could have asked for a waiver. I'm also a public servant and wouldn't you know that the Public Service loan forgiveness only kicks in after you've paid for.... you guessed it... ten years.

 

[mefordis]

Instead of loan forgiveness, how about free community college for people with at least a C average?

 

[Southernmiss]

Our son has federal student loans for a doctorate program. One set is at 6.08% another is at 4.something percent.

If the federal student loan forgiveness comes through, that would be great, but we are not counting on it.

 

[soccerdad72]

Instead of loan forgiveness, how about free community college for people with at least a C average?

That’s being discussed separately as well.

 

[wvjules]

All 3 of my kids have the federal student loans. Oldest has had trouble paying them down. She was on reduced hours during this pandemic, she works in nursing home/rehab center. They lost residents and were not taking on new ones. So she deferred them this entire time. Now she is looking for another position and everywhere near here is only offering part time hours. I hope the loan forgiveness is honored, but very much doubt it.

DS was lucky to get a FT position, and living at home, has been trying to pay extra on them.

Youngest is entering senior year of college, will also have the federal student loans. She probably could have gotten away with a reduced amount, but even though she has worked extra hours during this pandemic, she has spent most of the extra money, although she has had to purchase her own masks daily, and had to buy a new desk top for her online classes.

I would NOT advise anyone to take out loans in the hopes they will be forgiven. It was a good selling point, but I do not see it happening, which is why I have encouraged my son to pay them down as much as he can.

All federal student loans are automatically in forbearance with no interest accumulations. Borrowers had to Opt-OUT of that. I think that started in April 2020 and goes through at least September 2021. She shouldn't have had to do anything.