Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I have a young friend who's a junior in high school right now. She lives in New Mexico as do I, that's how we met. She is looking at colleges as far away from her parents as possible, which I can understand - she's academically capable of getting into some very good schools.
She has 3 or 4 schools in mind on the east coast, and for various reasons she's not eligible for a lot of their scholarships/student aid. She has no family there either so she can't try for resident tuition. She'd be financing the school by herself, essentially. What this boils down to is that she needs a loan for about $100,000, and she's willing to take it.
Her parents have been really useless on this front. They saved $20,000 for her college education but then spent it on a car last year. They say the car is hers for college (?!) They think that she should "follow her dreams" in regards to going where she wants for college, and that paying off a loan that big "can't be too hard." (Her parents inherited a ton of money from their own parents so they live debt free - but my friend has had to pay her own way for everything.)
I am struggling to pay off my $18,000 student loan. It's not easy and has delayed my ability to buy a house etc. I don't think she realizes how huge $100,000 is and how long that would take to pay off. She doesn't seem to have anyone around her to give her sensible financial advice. Her older brother went to a state school in NM to save as much money as possible and graduated with less than $3000 debt. I'm not sure whether to keep talking to her about the massiveness of the loan, or whether I should back off. Any ideas? Is $100,000 reasonable these days? I was in college 10 years ago.
probably the best way is to break down some of the fun facts of the debt - that you cannot bankrupt it away, work out the absolute minimum payment that she would have to make and remind her how long she'll have to make that payment
look at the salaries in her desired field, etc
i know people who've taken on large debt loads to do social work or other jobs that typically don't pay a lot - it's a very tough situation for them than for some of the others I know with a similiar debt load in much higher paying fields
also, do they have any intention of a graduate degree? - if so they need to realize they'll probably still be paying on undergrad while trying to obtain graduate
Don't worry about it. I just don't see how she would get the loan on her own without a Co-signer. Why would she not be able to get ANY scholarships/student aid ( provided she is not here illegally....) ?
Show her what that would break down into on a monthly basis and how long a period it would take to pay off. I think that that helps with getting a more realistic view of mortgages. The difference between $300K and $400K may not sound THAT huge to some people for a house, but it makes a BIG difference in terms of what you're expected to pay monthly.
I can understand the desire to create a physical separation from her parents, but it may not be a wise move.
If she can get a full boat scholarship, great. If not, that's an unreasonable amount to pay for an undergraduate degree. She is far better off going to a less costly local school or a community college for the first two years.
Are the parents expecting to pay anything out of their own pockets for this?
I have a young friend who's a junior in high school right now. She lives in New Mexico as do I, that's how we met. She is looking at colleges as far away from her parents as possible, which I can understand - she's academically capable of getting into some very good schools.
She has 3 or 4 schools in mind on the east coast, and for various reasons she's not eligible for a lot of their scholarships/student aid. She has no family there either so she can't try for resident tuition. She'd be financing the school by herself, essentially. What this boils down to is that she needs a loan for about $100,000, and she's willing to take it.
Her parents have been really useless on this front. They saved $20,000 for her college education but then spent it on a car last year. They say the car is hers for college (?!) They think that she should "follow her dreams" in regards to going where she wants for college, and that paying off a loan that big "can't be too hard." (Her parents inherited a ton of money from their own parents so they live debt free - but my friend has had to pay her own way for everything.)
I am struggling to pay off my $18,000 student loan. It's not easy and has delayed my ability to buy a house etc. I don't think she realizes how huge $100,000 is and how long that would take to pay off. She doesn't seem to have anyone around her to give her sensible financial advice. Her older brother went to a state school in NM to save as much money as possible and graduated with less than $3000 debt. I'm not sure whether to keep talking to her about the massiveness of the loan, or whether I should back off. Any ideas? Is $100,000 reasonable these days? I was in college 10 years ago.
Thanks
Ha! That story is almost identical to mine. Done to the numbers and everything. I wish you had been around to persuade me to not do it! Though(4 years ago) I did get a loan for that amount with no cosigner(decent interest rate as well).
It will take me about 7-9 years to pay it off, at the rate I am paying it now. I have an engineering degree and do some freelance writing on the side. Though if I could go back I would not have took out this much college loan debt.
Plug it into an amortization calculator. Match that up with expected after-tax salary following graduation (as well as assessing earnings potential for whatever career she's interested in). I think her mind will change quickly after doing that. Her parents aren't doing their daughter and good by saying that this debt "isn't a big deal" either.
Thanks for the replies everyone. As someone else said here, it's possible to get a loan without co-signing, which is what she's planning to do. And no, her parents are not intending to help her out - they have said they'll help out with costs if she stays in state only. As far as they're concerned, they bought her a car and that's their "help" for college :eyeroll: that $20K they "saved" for her is something they spent for themselves and then tried to make it look like the car was hers originally. As for scholarships: she's eligible for small ones, up to about $4,000 a year. Which isn't bad, but it's not great. Her grades suffered badly last year so the scholarships that are purely grade based are ones she won't get. That's also going to hinder her getting into a good school of course, but she has very exceptional circumstances that can explain the grade problem.
I like the idea of showing her what monthly payments would look like. She loves clothes so I think I'll show her how little she'll have for clothing once she's paying off this loan! I'm wearing shoes with holes in them for work these days thanks to not being able to justify new work shoes right now. Damn loan payments. Damn low-paying job I have.
That's absurdly high, unless she's very sure she will be a neurologist, or some other equally high paid professional.
There may not be much you can do. She's got to make that decision on her own. You're a good friend for trying though.
I'm curious as to when jdm got his loan. it may have been easy for him to get such a loan back when he got it, but it's likely far more difficult to do so now due to the credit crunch. plus, this is someone w/ no credit you're talking about so she's unlikely to get great rates. honestly, I agree w/ everyone else that this is way too much money for an undergrad degree unless she's going into a relatively high paying field that doesn't require a graduate degree (even future docs shouldn't take out that much in loans for an undergrad degree, IMHO)
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
