Use savings, get loans, or do both?

lerkin
Tue, 10 Apr 2012 12:50:01 +0000

My kids are not in college yet,

but our plan is to have our son take out Stafford every year so that he has at least some skin in the game. We will pay the rest out of current earnings or savings. I already told him that I will be only paying equivalent of state flagship tuition and maybe dorm room (he can commute to state flagship). On top of Stafford at the very least my son will be responsible for food, books and personal expenses.

Because my son’s loans are going to be unsubsidized, I am planning to at least pay off my son’s interest each year while he is in college. If he does well at school I am also planning to pay off his Stafford. I am not sure yet if I am going to pay it off at the end of each year or upon successful completion of his degree.

I might change my mind in 3 years, but at this point this is the plan and my son knows it. I will not be cosigning any loans, nor will I be taking out parent PLUS loans, so if my son wants to go OOS or to private, he either has to get merit-based scholarships or win the lottery.