<p>By the way, when I said “fraud”, I did not mean it as a criminal offense. I meant that the loan is obtained under false pretenses (that are not and probably should not be criminally punishable).</p>
<p>Unscrupulous lenders do prey on the naive & insurance companies aren’t necessarily much better.
My dad died in his early 40s and his life insurance policy was enough to cover their mortgage. However the company tried to get my mom to reject the claim under the guise of a suicide clause even though his cause of death was “natural” according to medical examiner. </p>
<p>But any time there is a big debt, a mortgage, a business, even a large education loan, it is a wise idea to get some kind of insurance coverage if it will cause a hardship to pay it off.</p>
<p>I think the naive can also get into a trap of thinking a brand name school is worth the extra expense, even if a private loan is required to pay it. If you don’t have the money, and it is more than what govt loans will cover, it isn’t affordable in my opinion. There are still ways to procure an education without putting your future at risk.</p>
<p>Neither H or I have attended a 4yr college, & I never did graduate from high school, but I do understand what a promissory note is. ;)</p>
<p>[Direct</a> PLUS loans for parents](<a href=“http://studentaid.ed.gov/PORTALSWebApp/students/english/parentloans.jsp?tab=funding]Direct”>http://studentaid.ed.gov/PORTALSWebApp/students/english/parentloans.jsp?tab=funding)</p>
<p>Emk…you’re a savvy lady. You’ve graduated with honors from the School of Hard Knocks.</p>
<p>:)</p>
<p>I have a very dear friend who has had a very rough 10 years. Her children have always been her pride and joy, and a wonderful bunch they always have been, also very good students and very talented. Teachers, friends,counselors, everyone has told her how lucky she has been with those children, and I agree.</p>
<p>But when it came time for college, due to issues with a family business, a husband who leaves the family on a regular basis and works at not contributing to it, poor to no financial planning, there was no money to pay. Daughter did not get into any of the top colleges that guarantee to meet all need, so the packages all were more than my friend could pay. </p>
<p>But she believes in her daughter and in education,and felt it would be an investment to put the money into her college education. She would become a highly paid doctor, lawyer, whatever, and the money would be paid back in no time. That was over 10 years ago, and the family is pretty much in financial ruins with no credit, no jobs, no way to get out of the trap. Ironically the one who is doing the best is the husband who refused to sign anything or pay anything for college. My friend and her DD are on the hook for $90K, probably more by now as the interest just keeps right on accruing. Her DD did not do well enough for med school to be a realistic choice, and she could not afford law school even if she did get into a program. She is working 3 jobs trying to make ends meet and get somewhere on the loans which are all in late payment status. They had to turn down a nice offer from a school for another daughter because they could not come up with any of the payment. It was a generous award, but at this point, there is nothing left. Couldn’t do it. The next two kids are working their ways through college as will the younger ones. </p>
<p>I don’t believe the loan alone was the problem, but it is a huge problem in this situation that just can’t be ignored. You can’t count on an 18 year old kid to champion your retirement, be your pride and joy. Too many of them end up needing psychological help and support themselves before getting on their feet. It can take a long time for a young person to become self sufficient and taking out miserably high loans just adds that time. </p>
<p>So, yes, it is stupid to sign up for a lot of loans, on the basis that you and/or your kid will be able to repay them. The only ones for whom it makes sense to borrow that kind of money are those who pretty much know they can pay it back. Even then it is painful. If you couldn’t save it, you’re not likely to be able to save it in the future, and that is really all a loan is. Future saving payments going to someone else.</p>
<p>Rarely (very rarely) is it ever necessary to take out large loans for college. It may be “necessary” to take out large loans if your real goal is just to give your child what he wants. But, that could be said about anything…'Uh, I had to take out that large car loan because Susie insisted that only a Mercedes was the perfect fit for her."</p>
<p>There are alternative to large loans… If the student didn’t apply to any safeties, then take a gap year and reapply or start at a CC and then go to local state school or whatever is affordable. Some people do ROTC to get their education paid for. That’s not for everyone, but it is an option.</p>
<p>There are very, very few careers that require a student to go to a particular pricey school. And if that is the goal, then go to that school for grad school. And, no one has a right to go into a particular career if it means putting oneself or one’s parents into serious debt.</p>
<p>I have similar story, an acquaintance of mine is almost in the same boat. They work hard and borrow so that their son could attend Emory as a pre-med. The kid finished Emory, no med school and jobless for almost two years now… I think I am witnessing another acquaintance with a kid at Vandy!</p>
<p>borrow so that their son could attend Emory as a pre-med. The kid finished Emory, no med school and jobless for almost two years now</p>
<p>Agh!! And for pre-med! So unnecessary! If parents only realized that probably less than 25% of pre-med students on ANY campus actually end up going to med school. The first 2 years there is heavy weeding and at least half stop being pre-med. Then during the second two years, some of the remaining end up never applying. and, of the ones that do apply, a good number don’t get one MD acceptance. </p>
<p>Borrowing for pre-med can not be justified.</p>
<p>
Who called anyone stupid? And what makes you think that people cautioning against cosigning private loans are wealthy?</p>
<p>We are by no means wealthy. That is one very good reason why I would never ever cosign a loan. I know that, if something bad were to happen, I simply can not afford to repay a big loan. Not wealthy people are the very people who should never ever cosign for large loans. The only people who can really afford the risk are probably wealthy people. But if I were wealthy, I would either give my kid the money, or maybe lend it to them - I would still not cosign. It is much too risky to the cosigner who has no control whatsoever and who may not even know till his/her own credit rating has been impacted that the borrower has defaulted (or paid late). </p>
<p>A lot of people don’t quite realize the risk they are taking when they cosign. it is basically like taking a loan out yourself as far as the impact on your credit rating and ability to borrow other money, but with much less control over the situation.</p>
<p>Right…wealthy people wouldn’t be borrowing for college.</p>
<p>A lot of people don’t quite realize the risk they are taking when they cosign. it is basically like taking a loan out yourself as far as the impact on your credit rating and ability to borrow other money, but with much less control over the situation.</p>
<p>Right…I think sometimes people think they are just doing the person a short-term “favor”. Like using connections to get a friend a special deal.</p>
<p>Post #19 Momtocollegekids wrote: “As for the word “stupid”, I don’t think anyone said that on this thread. I do think that many co-signers haven’t thought it all through…how much their kids will be paying back, how their kids will afford to support themselves while paying back these loans, and how the parents will be on the hook if their child can’t.” </p>
<p>I was referring to YOUR comments in post # 5: "Yes, Plus has death protections in there, but that doesn’t solve the problems when parents and kids make stupid agreements that the child will help pay the Plus loan, yet the child never earns enough to really do so. "</p>
<p>Private loans were the only way out for my kid. She could not attend the local state school without them. For some people, the choice is between private loans and “do you want fries with that?” for the rest of their lives.</p>
<p>When she started college there was a shortage of math teachers and she was told she’d have her pick of jobs when she graduated. Then came school budget cuts. The teaching position she interviewed for last week had over 200 applicants.</p>
<p>KKarma,</p>
<p>I disagree that private student loans were the only options for your daughter. At least not for the entire 4 years, i.e. CC for the first 2 years. Or going to school part time while working full time.</p>
<p>I don’t know how much your daughter borrowed, but even maximum Stafford loan amount is plenty for a math teacher. Given your daughter’s aspirations, it was extremely unwise to borrow more than that.</p>
<p>So, Lerkin,
According to the logic of all of you ponitifcating about the evil of private loans (which are a bad thing, but sometimes a necessary evil), poor kids should just stay where they are. No undergrad loans for anyone who wants to be a doctor - keeps all those med school spots open for the wealthier kids, eh, if the poorer kids never get to compete? Take eight to ten years to get an undergrad degree, sure, what the heck?<br>
There are NO state schools that offer the degree that my youngest is pursuing. Her only chance was to go to a private school, and since she had to take specific science courses from freshman year on, CC was not an option. Thank God for Obamacare, because she has a $44K grant for grad school. She’s #2 in her class - but according to the ideas on this site, she should not be there because she is poor.<br>
And I REALLY like those comments about how parents should give their kids the money instead of co-signing loans. Do you REALLY think that if we had the money to give them we would take out the damned loans with them???</p>
<p>KKMom, I use the word “stupid” for some loans that are taken out. I am not directing them to any particular person or situation, but there are those who did do a stupid thing in taking out too much in loans for education. The word does fit. If it is truly the ONLY alternative, then it may not have been a foolish situation. There are places that do not have community colleges or local state schools within commuting distance, or it is necessary to buy a reliable vehicle with the expenses that go with such ownership, in order to go to the only local options. If the family has no money at all for college, and there are no jobs in the area, those loans might be the only way out. It is rare that such a thing happens, but, yes, I am aware that it could. The system is failing in such cases, and I completely support additional aid to be directed to such circumstance, and am sorry that those in this predicament are caught this way.</p>
<p>In your case, the local state school was more than what the Stafford maximums would cover, and there were absolutely no part time work prospects? No less expensive way to get some of those basic credits? That she was going into a field that was supposed to be flush in jobs and money is not something that I even like to put in the equation. Most of the kids who have such intentions at age 18, are not going to stick with that course of study, so to count on that is taking a risk. That your daughter finished a math curriculum is impressive. Few do. But as you can see, even making through the desired studies gives no certainty of good employment. Things change. I’ve seen Engineering prospects dry up, and a number of specialty niches disappear. There is no certainty in anything except those loans have to be paid. </p>
<p>I’ve known many, many parents stuck with PLUS that their kids were going to take over, and the same with private loans. The jobs don’t pan out too many times. For me it’s an old story, that starry eyed parents and student don’t want to hear. It’s not going to happen to them, they firmly believe. And if often does not. When it doesn’t, well and good, but the downside to the risk is a terrible one, that can really ruin a family’s finances and kids’ prospects for certain jobs too. when some do get a good job offer, the credit report tanks them. There are a lot of jobs that require a squeaky clean report and the employers will do the check. Try to get a non student type apartment without the credit report too. It can be a tight noose around one’s neck keeping one at home and out of good jobs.</p>
<p>KKmom,</p>
<p>This is not what I am saying. I was saying there are different routes to get education without getting private loans. Belive me, I know. I WAS a poor kid. I went to state school (for science degree). I worked 20-30 hours a week while going to school full time. I did not get a specific specialty I wanted, but this is what grad school is for, which I could go to because I was free of loans. Financial freedom is highly underrated.</p>
<p>You and your daughter are entitled to your choices, but having made those you and your daughter should be ready to accept the consequences. When your daughter has to pay monthly payments on the loans you helped her take, I wonder if she would feel it was a wise investment.</p>
<p>I know plenty of doctors who got their classes at community college. Including a close friend and neighbor who went back to do this at age 50. it was good enough for her. Once you are applying for medical school, that’s a whole other story when it comes to borrowing. Borrowing for professional school that have a high rate of return is a good “investment” many times with a smaller downside risk. To put that much risk on an 18 year old student is a whole other story. </p>
<p>Again, i want you to know that I don’t think it is stupid for every case, but in most cases there are less expensive alternatives that just don’t strike the student/family’s fancy. And yes, sometimes you cannot pursue the exact degree you want if you don’t have the money. That’s not just for those who qualify as poor either. My family is considered well to do; we don’t qualify for any financial aid, and, yes, there are some opportunities my kids have had to pass up because it is puts too many of us in the family at too great of a risk for them to pursue those opportunities. </p>
<p>I did it with my first. Took out loans and paid more than we should have for his top price college. He did get a good education in an area that is rarely if ever featured. It’s holding him in good stead now. But he could have gotten the same training in a more circuitous way, which would have made things easier for his younger siblings, his dad and the family finances in general. We nearly burned and crashed when things went south with the economy, and the money flow stopped. We owed (still owe) and didn’t have the reserves we should have had. Then some bad luck and bad health, and it was tight, very tight, too tight. i would not have done what I did in terms of letting my oldest commit to a top priced school had I taken those possibilities into account. Too many others that were put at risk, not just us. And there are plenty out there who got the same education through community college specialty courses or other sources after getting a more general degree at nearly any college. </p>
<p>What we try to do is to give a general rule where the least amount of harm is done when giving advice or stating opinions on an internet forum. Absolutely, there are exceptions to those rules. There are times some of these very posters have advocated borrowing when the situation seems to be that it is the best course of action. Your situation with your kid may well be such cases. But when the rule of thumb is set for those who don’t have the money to borrow it because it is a good investment for them and their kids…there is more harm, serious harm , than good to advocate such positions. It’s bad enough that they are being advocated so that people who can least afford the fall out, most believe this.</p>
<p>Lately, it seems whenever “wise choices” are brought up, there’s some knee-jerk about poor kids. </p>
<p>Are you saying, she could not attend the local state school without [private loans] but also that she applied for a teaching job only to learn there is no pie in the sky?</p>
<p>Many kids with loan debt ARE selling fries. Look at all the snarky Starbucks comments on CC. This isn’t about some families’ poverty and someone else’s strategy to keep poor kids down. Or, offering opps only to those who can pay for them. It’s about facing the reality that college is outrageously expensive and does not offer a guarantee. Making wise choices. Fully understanding the burden of the debts and just how you will manage that, at what sacrifice, over how many years. I am concerned that too many families only see the issue from the starting gate: we’ll do this and she’ll get a better career going than if she took a different route, made different choices or sacrifices. Then, the burden of the loans keeps them struggling for years.</p>
<p>Each family makes its own best choices. I am sure all of us on this thread wish your daughter the best in her job hunt.</p>
<p>I want to add, that both DH and I went to school on financial aid. We racked up loans and then even more for professional school. Though he is considered a success story and about as smooth going as it gets in terms of everything working out as expected, paying back those loans were so painful. We lived very poorly for a long time with those payments. And they are far less than what kids are taking out now, and the interest rates we got were far more favorable. We are talking 7% these days on loans that can be going up to $100K. I don’t know if it would have been worth if for us under those circumstances. There were cheaper alternatives, and we would have had to have taken them. Because it was barely doable as it was. We fell behind, had issues; could have been worse and maybe not worth it as it was. So I personally know how it feels to be behind the 8 ball of loans from 40 years ago to what we are still paying for our first child’s college which will finally be paid off when our 4th one graduates. crazy, the way these loans drag out and there is never enough money to pay the off. So believe me, I 've been poor, an felt those loans make me poorer yet.</p>
<p>way back on page 1 of this thread, lerkin said:</p>
<p>
</p>
<hr>
<p>well, it’s already happened that some of the big private lenders forgive the loan if the student dies or is seriously disabled:</p>
<p>Wells Fargo adopted the policy back in 2010:
[Wells</a> Fargo To Forgive Loans In Student Death, Disability - WSJ.com](<a href=“http://online.wsj.com/article/SB10001424052748704034804576025502046535830.html]Wells”>http://online.wsj.com/article/SB10001424052748704034804576025502046535830.html)</p>
<p>And according to this article [KeyBank</a> Agrees To Forgive Student Loans Of Christopher Bryski, Dead Rutgers Student [UPDATE]](<a href=“HuffPost - Breaking News, U.S. and World News | HuffPost”>KeyBank Agrees To Forgive Student Loans Of Christopher Bryski, Dead Rutgers Student [UPDATE] | HuffPost Life) they’re not the only ones:
</p>
<p>Yes, some loans have those provisions. The Direct loans all do. If parent or student dies, the Plus loans are forgiven. It’s not when the loans have these provisions that it’s a problem, it’s when they don’t. Too many times, parents are only too glad to sign these loans, thinking that they are “just” cosigning as they would for a first car for a kid and that these are investments. An informed, savvy borrower who understand the risks and has some contingency plans in mind is not what concerns me. It’s those who don’t understand and won’t open their minds to understand because they are hypnotised by all the hype that goes with the college process these days.</p>
<p>Momcat2,</p>
<p>Yes, I guess it happens when a perfect storm of public opnion happens. The fact of the matter, as sad as that case was, his father did cosign the loan promissing to pay if his son would not. </p>
<p>I don’t see this happening in the general case. If does happen however, all that will be accomplished is increased cost of borrowing.</p>