Employers may pay back your federal loans (27k total) and not all/many do.
Again, I just want to emphasize that the big 3 tech companies DO NOT. I work for one of them. So I have no idea where OP got that idea.
So let me get this right. Your parents have a $300,000 income and have always said they would pay for you to go to college.
However now they want YOU to cosign $59,000 a year in college loans.
And they hope a future employer will pay for your college loans of they do so?
Sounds to me like they really don’t want to pay for you to go to college.
JUST SAY NO.
Your parents can take a Parent Plus loan up to the cost of attendance. If they think huge loans like this are a great idea…let THEM take the loans.
You are risking YOUR future by taking these huge loans. They are in your name if you cosign. Your payments will be in excess of $3000 a month for at least ten years…at least.
I would suggest you offer two choices to your parents:
- Offer to attend a local community college....where you can commute...for two years so that YOU don't have to take out these huge loans for those two years.
- Take a gap year and apply to places where you might get some merit aid next year as an incoming freshman. That way you would need less loans...maybe none depending on your grades and. SAT scores.
It sounds like you have acceoted admission to a private university that doesn’t give merit aid…and where you did not qualify for need based aid (with that income…you wouldn’t).
Your parents need to hear from YOU that you are going to take a less expensive option.
Oh…by the way, there are a FEW employers who are adding college loan repayment as a benefit…but my guess is there is a limit on that benefit that likely will equal the federal direct loan amount of $27,000 for all four years.
Do your parents also think employers are a bottomless pit of money? Guess so.
ETA…just remember…you are assuming you will get a high paying job at Google or Facebook or the like. Maybe you will…but remember something…the cost of living in that area is VERY HIGH. VERY. If you are paying off loans to the tune of $3000 plus per month…and are paying rent to live in that area…you will have pretty much no income left to do anything else.
http://time.com/money/4261054/employee-student-loan-repayment-programs/
The benefits are like this:
Here are others. The legalized brothel sounds amusing:
That will not help much on that huge debt. And whose to say you can get a job with a company that offers loan repayment assistance. Your parents’ idea is terrible. They are potentially shifting the cost to you. Do not do this.
One more thing…the cost at your college is going to increase each year you are there. So, it’s highly likely your loan will actually be HIGHER.
IF you get a job with one of the big tech companies (and that’s a big IF) where’d you get the idea they’ll pay your student loans?
Sounds like this student is an out of state student at Caltech. It’s a great school…but NOT worth this amount of debt.
My read of the situation is that parents are willing to ultimately pay for the loan and will co-sign for it. It also seems that the parents can afford to pay for the loan (i.e., they are not living beyond their high income?). If the OP has a very good relationship with the parents and realizes they might change their minds and exert a bit of control over her AND she is willing to live with this then it seems like it is ok to do this.
Perhaps the parents think there may be some sort of forgiveness or reduction of government debt in the future, who knows…maybe they want her to have “skin in the game”. In any case, if I was the OP and felt this would not put my parents in bad financial shape I would be willing to take the risk. That being said, I would want to be sure that this college is worth the costs compared to other colleges I was accepted into.
With all due respect…I disagree. The parents can take out all of this debt…without the student. If they really think that they will be repaying it, then do that.
Subtract the direct loan amounts per year and have the student take those in her name only…$27,000 total for the four years.
These parents have a huge income. This student is guessing on future income…and flying on a wing and prayer that loan repayment will be forthcoming from her parents.
Any number of things could make this NOT happen. Parents could have a financial crisis of some sort. Parents could die. Parents could have medical issues that eat into money. Parents could divorce…and sometimes that eats up a LOT of money. Parents could just say no.
Of course…the student also could walk away from those cosigned loans thus leaving her oarents respond oboe for them.
Sounds like it could turn into a family mess.
@thumper1 I also questioned whether the parents wanted their child to attend this particular school , and if it was a " If you want to attend X school, then you will have to consign all of the loans " situation.
The parents plan to co-sign the student’s unsecured private 3% variable rate loan to the tune of about $60k per year. This would then presumably be the student’s debt, not the parents’. My understanding is that there is no exception to the gift tax return filing requirements for paying off your child’s student loan debt in excess of the annual gifting limit. This is different than paying your child’s college directly because that is not considered a gift.
For many private loans…repayment begins immediately after disbursement.
@thumper1 I agree with your list of what could go wrong and think the OP should consider it carefully. If I were OP and I felt I was a great student and would work hard and had a very good relationship with my parents and these parents had not shown themselves to be wasteful with their money and/or unnecessarily controlling I would be willing to take the “risk”.
My kid is not going to college for several years so I am not too familiar with the rules around the loans but when the time comes, if I could get kid to take a loan for the full amount of college and the interest is deferred until graduation then I can see it being a good idea to take loans and pay at the end of college. Similar to using a credit card and paying in full at the end of the month? Once again, I have not had a reason to understand current rules around various loan options.
To me the bigger question is if it were the OPs money, would she still be willing to spend the $60K per year compared to other, less expensive options. If not, then she should not spend her parents money.
Interest is not deferred until graduation, payment is. Interest accrues, even for unsub Direct Loans.
These are private loans. The interest will not be deferred for even one day.
This student has parents with $300,000 incime now. Even student loans will not have deferred interest payment. This student will not qualify for subsidized loans.
The student got acceoted to Caltech…an expensive private university. It is a great school.
But this same student could have gotten merit aid at any number of colleges where computer science is offered as a major.
ETA…since the OP is belong asked to cosign these loans…she should view this as HER money…as she will also bear an obligation for repayment.
Thanks for the info, I had a small loan many years ago when I went to college and I thought that interest was deferred also?
OP, if your parents have assets and are financially savyy, then they can take out the loans on their own. You could agree to take the $5,000 or so that you can borrow on your own as a way to show you have skin in the game.
OP, if the only reason to do this is the hope that some employer will pick up part/all of the tab, just get the $27K in student government loans, since it is unlikely any employer will pay more than that.
No! My nephew works for Google and they don’t pay off loans.
My cousin’s son graduated from Stanford BS and MS with some debt, works for a top company…and he’s responsible for his loans.
Have you changed your major/career goal? A short time ago you were going to be a humanities major.
Either way, top companies are NOT paying off your debt.
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you’ll have a quarter of a million dollars debt dangling over your head and will be beholden to your parents BIG TIME after graduation, subject to the whims of their pleasure.
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This is very important. I don’t know your parents, but there are some that would use that power to make you do what they want. If they don’t like who you want to marry, they could say, “fine, marry him, but now you’re paying back your loans.”
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Or major in sports management?
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Gymnastics!