<p>Out of curiosity, when your kids were looking into college and realizing that they would have to take out loans, did you discuss with them how much their choice would cost them monthly in the future?</p>
<p>Obviously some parents cover everything and some people have full rides and what not, but for those of you who gave kids that took out loans I’m just curious how this conversation went down.</p>
<p>I feel like there have been a lot of people recently who graduate and are shocked when they see that their, say, 40k that they knew they were borrowing would cost them 400 a month to pay back. Like sticker shock all over again.</p>
<p>My mom is a banker and has been dealing with loans, credit, etc my entire life. She was the one that they would send to local colleges to discuss the impact of debt. I have been fed these warnings since the cradle. </p>
<p>Even knowing that though, it was hard to turn down loans that seem so tempting as “free money”. I did it, but only because I’ve been programmed like that lol. </p>
<p>None of my friends understand how much they’ll be paying after graduation.</p>
<p>Because of my background in accounting, I did discuss it (at length) with my D, but at 18, and excited about starting her new life, it meant nothing, and she openly admits that. Fortunately, for her, her repayment is reasonable, due to many scholarships and grants, but a few of her friends are not so lucky and are in way over their heads.</p>
<p>My parents told me that my student loans would be around 500/mo, and that they were really worried I’d have trouble paying it back-- as more of a passing thought than ever a real sit down conversation. We didn’t actually look at potential apartments and write out rent, utilities, gas, insurance, etc until I graduated and wanted to move out and by then it was too late to realize I couldn’t “just deal with it” like I thought I could. I figured I’d be dirt poor but assumed I’d be afloat, and I was wrong. But, at the time my options were 400/500 a month in loans or no bachelors degree until I turned 24, so I go back and forth over whether or not I really made the wrong decision. There’s only so much you can do as a full pay 20 year old with no support if you want that 4 year degree.</p>
<p>I am lucky I found such a nice guy to marry me so quickly after graduating or I’d be living with my parents until my loans are paid off. I only just turned 24 though, and if I’d waited to go to school until now-- as I sit here planning my wedding-- I probably never would have gone.</p>
<p>I think a common mistake is for kids to know how much their loans will be but not realize how much utilities, groceries, and incidentals add up to be-- or what their income will be. I knew what my loan payments and rent would be, but I didn’t realize how much all the “little” things would add up.I actually am making about 10k more than I thought I would be but I underestimated everything so much it doesn’t make a difference. I had magical thinking about my ability to make it work.</p>
<p>Happykid had no loans until her junior year, because she did two years at the local CC. We have discussed the fact that these need to be paid back, and about how much that will come to each month. I don’t know how well she has internalized the information. However, she will finish with only $15,000 in loans so her burden will be much lower than that of many other students.</p>
<p>We tried but daughter was pretty set in her ways. If it had just been undergraduate she would have been fine. Did a year of Americorp and that knocked off around $5000. Balance was very doable but after a 2 years masters program, not so much. Does have a decent job in a rather low expense location so she should be okay but certainly no frills living. Being a single person with a decent salary putting her just in the 25% tax bracket is a killer for federal taxes. The most difficult is for a young adult to come to grips with not so much the total amount but that is is for the NEXT TEN YEARS!</p>
<p>My kids took only the Federal Stafford loans, our requirement so that they would have “skin the in the game” for their pricey private schools, for which we were full pay. So their full indebtedness was somewhere in the $20K+ range, not so bad as they are in fields (D an economist, S an engineer) which put them in a position to handle them (even though D did grad school as well, but her loans remained below $30K thanks to grad school funding).</p>
<p>I did discuss these loans with them and encourage them to go over the calculations for future repayment schedules.</p>
<p>Also, I recall that son (college grad '12, high school grad '08) was required to take an online loan literacy/“I understand what I am getting into” session that was supposed to assure that he was aware of what he was agreeing to.</p>
<p>In any event, neither of my kids had a problem handling their loans, although neither is fully paid off so far. Both have been paying their loans off at an accelerated rate. </p>
<p>Son’s GF is pursing an expensive professional school degree (DVM) and is incurring heavy indebtedness for that (had no undergrad loans). She is well aware of the future burden (has discussed it openly) and I hope has done the specific calculations. But she is counting on the Federal program that limits loan repayments to 10% of income. <a href=“Priorities | The White House”>Priorities | The White House;
<p>New proposals with those starting fall 2014. Water under the bridge for us. Still don’t get how the direct loans can be 6.8% with mortgage rates half of that and cars another half.</p>
<p>We did not discuss specific payments, but told DD that she would need to take out some loans if she went to the schools where we would have been full pay. She said she did not want to owe anyone anything and went to the scholarship school. We did not let son (three years younger) apply anywhere with a higher cost than we were willing to pay.</p>
<p>I like an online loan literacy class. Or even a life skills class that reviews how much things cost. And that even though you’re starting salary is x you will only pocket y.</p>
<p>I have always felt strongly about a minimum amount of financial literacy for my daughters. Had them both pay bills with me including writing out the checks (before online banking) starting at ages 10-11, understanding bank accounts, the concept of loans/principal/interest/equity in their teens, etc. During the college selection process we did jump on an online loan calculator and ran “what if” scenarios, and also discussed paying interest while still in school as well as the concepts of deferment and forbearance. Last week we accepted/declined her freshman loans and did the online loan counseling together so that I could make sure she understood what things meant. </p>
<p>I think I have sufficiently scared her straight - she dreads the thought of interest accruing, haha! I would also highly recommend any of the Suze Orman DVDs or shows designed for young people. I purchased a DVD of her “Young, Fabulous and Broke” show, and although a bit dated the topics are age-appropriate for teens and twenty-somethings.</p>