OK, I found this from one of your posts at the start of this thread. Worst-case scenario, if your ex-H does not contribute a dime, and assuming you can pay the same $20k you paid in each of the first two years, there will be an additional $26k per year to take care of. Total $52k. He has not taken on any other debt. I think $52k is an OK amount of debt to take on, assuming your S agrees to pay it. He can take $15k of loans in his name. That leaves $37k in Parent Plus loans. Draw up a formal agreement between the two of you to agree that he will pay the $37k. Even though you would be legally responsible for the Parent Plus loan, sounds like you would trust him to pay it back. With an Amherst degree and a career in consulting, he should be able to pay it. Maybe along the way his dad will kick in some of it.
He does not have to transfer out of Amherst to avoid taking $52k in loans. That would not be a rationale decision for an ambitious young man seeking to go into consulting.
My S did what was basically a consulting job for a couple of years. (He was employed by his company but did the same work as the consultants, working remotely). His benefits were slightly different, I think the consultants meals were per diem but his were expensed. I think they had a dollar amount for certain other expenses and his were covered by the cost. It doesn’t really matter.
Except that he saved a ton of money over those years. It was very hard work and it’s a young persons job, meaning that he didn’t have much of a life. He lived with his gf but many of the consultants lived with their parents on those odd times they were home. S saved enough in those 2 years or so to pay for a down payment on a very nice house and pay for a very nice wedding. He also had lots of hotel and airline points!
This is a long winded way of saying that I know my S could have saved enough to pay for school if he needed to. Worst case senerio. Such as this one.
@brantly@OHMomof2@deb922@oldfort@thumper1 So a friend mentioned possibly taking loans out ofm401k or 403b accounts at lower interest than parent plus loan. Any knowledge of this option. I have a small 403b I could pull from and ex has multiple retirement options to pull from. Maybe I could pitch this idea over parent plus.
I cannot imagine taking out more than $20k in loans, higher interest. I’d cash out retirement (very little but something) before doing anything loan wise over $20k. I don’t have the earning potential to make that happen. Too high of risk. I need to be responsible.
Well your S can get $7500 a year Direct Loan and if you apply for and are denied a parent plus loan he can take an additional $5000. So there’s $12,500/year - his debt not yours.
You can only borrow from your 401k (and I assume a 403b) if you are still working for that employer. There are limits on the amount you can borrow (50% of total?). Since you just changed jobs, I doubt you can borrow from your account unless you rolled over from a prior employer but it’s worth looking into.
It is very easy to qualify for a Plus loan. Your credit score or ability to repay is not considered. They are not at a high interest rate but are below 8%. In the prehistoric days when I was in school, the 1980s, the guaranteed student loans were at 7% and 9%. People with good credit might find lower rates out there, and you might prefer to have your son borrow a private loan with you as a co-signer. Some private loans will drop the co-signer after a few years of repayment. He may also be able to refinance his loans post graduation if they are in his name, and for some professions the interest rate can drop.
Borrowing from 401k comes with some complications. I’m no expert but I know that you will have to pay back the amount before leaving the job whether that’s in the monthly payments or in a lump sum.
All 401k and/or 403b plans are not the same. Some may, but many will not permit in-service withdrawals, even for tuition payments. You’d have to check with your plan administrator.
Since 401k money has not been taxed when contributed, it does get taxed when it is taken out. The “penalty” generally refers to an additional income tax penalty of 10% for distributions made before someone reaches age 59 1/2.
The son needs to tell his father that his mom has been terrific so far, that they are all working together for the same goal - for him to graduate from Amherst, but it won’t happen unless dad steps up. If dad doesn’t step up, it sends a perfectly clear message to son about dad’s priorities.
If dad doesn't step up, it sends a perfectly clear message to son about dad's priorities..<<<<<<<<
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Again, the vilification here is not helpful, this kid already costs 20K a year for school, now it is 46K. IIMO as a married parent this would not be doable for just one golden child in a family of 3 kids. Ask nicely, beg, but don’t think his opinion is less valid . This is down to a planning problem, not a dead beat dad problem. We really don’t know who pays what here. This issue should have been considered 3 years ago. That is a bummer for the kid most of all but most kids wouldn’t have got to go to this expensive school in the first place.The last thing need here is to make dad feel he has been manipulated into this corner.
The dad may have thought he was on the hook for no more than part of $20,000 per year for 4 years for a private, expensive school. Less than the cost of many publics these days. Now, the cost has increased substantially. He may not have gone along with it if he had known this was going to happen. He may need to be approached carefully,the son acknowledging that this increase may be a shock but that he really needs his help. Hope the interview went well today!
How “responsible” is it to borrow from your small 403b if you don’t have high earnings?
I’m no expert, and please correct me if I’m wrong, but isn’t putting yourself in financial jeopardy to finance an expensive private school something most financial aid advisers counsel AGAINST?
Somebody in that administration should be creative enough to help you cut enough corners to make it manageable. Could he be a dorm R.A.? Does the cafeteria have a deal where if you work there they give you a break on meal prices? Is there an elderly emeritous professor who needs a live-in assistant? Does a professor on sabbatical need a house sitter? Would it be possible to take summer classes at a state college near home & transfer them? Remember, there may be a rule or a common practice, but if you go up high enough, someone can approve an exception.