The direct loans listed above are at a very reasonable rate to students, with a 1% origination rate and usually about a 4-5% interest rate. Still, if the student takes all the loans he’s allowed to, it can be $30k at the end of 4-5 years. That’s a lot of debt for a 22 year old, so think about it carefully. The Parent loans have a 5% origination fee and a higher interest rate.
If the parent is taking on debt that the student is expected to pay, that’s too much debt.
You are so fortunate to have found College Confidential before your student has submitted application. Read all the posts this week about the students who can’t pay the $30k or more that’s not covered by financial aid, the student’s loan ($5500), and a merit scholarship. Many of those students are having to choose their Plan B - so let’s hope they have one. You see students who want to go to UCLA or Georgia Tech because it is a ‘dream.’ Often, it can’t be done. Help your child fall in love with a more affordable school, a school that is going to give big merit. Be proud of earning that scholarship.
Look way outside the box. Full rides at South Dakota School of Mining and Technology. Univ of New Mexico. Canada. The deep south. You can always say no, but consider them.
http://www.thecollegesolution.com/deciding-between-college-prestige-and-cost/
An old article but still relevant, by CC’s own Lynn O’Shaughnessy