# Banking, Lending decisions, & Student loan debt



## paoutdoorsman (Apr 23, 2016)

endrow's chat about his annual bank seminar/meeting prompted me to post about a decision we are facing. Would like to gather advice and opinions from anyone with experience or knowledge. Youngest daughter is desiring to go to an expensive private college that would result in student loans and/or parent plus loans that my wife's and my names would be attached either directly or as co-signers. I'm thinking co-signers but not certain how all that works.

I'm currently renting it, but at some point in the future I expect I will need to make a decision on buying the family farm. I'm hesitant to attach our names to a chunk of student loan debt that would ultimately be hers, even as a co-signer, as I'm not sure how it would be viewed in regards to a lending decision for the farm. I also have no idea when that decision will have to be made. Could be 2 years, could be 10 or more years.


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## Tx Jim (Jun 30, 2014)

IMHO cosigning a legal document is just as detrimental as having the document in ones own name. My late father advised me yrs back not to ever cosign a note & I ignored his caution & got to pay off a note that I had cosigned. Never again for me!


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## Swv.farmer (Jan 2, 2016)

It's ultimately you and your wife's decision.
But for my thought the bank will look at it that you may aquire the debt.
I can say I love my children but if they can get the same education at another school and save them money and me money that's what they will have to do.
Or work really hard and get a scholarship.


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## r82230 (Mar 1, 2016)

+1 (to SWV), don't jeopardies your situation, unless she is going to take care of you, when your old and gray.

Larry


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## BWfarms (Aug 3, 2015)

Co signing loans has its place. If it doesn't put a strain on your purchasing power and you want to help, go for it. If you're looking to finance land, it's best to have the land loan secured beforehand because they frown on personal loans.

Side note for the cost of higher education. Hope she's not planning on majoring in economics because she already failed if she chooses a school that costs more. I think making her responsible for her educational costs is the best lesson you can teach her. Give her options. Express that you will help with low cost options like community college tracking for university transfer, this will give her a better head start against debt. Or she can swallow the pill and be strictly responsible for the loan of the expensive education.

I can read a borrowed course book and teach myself just as well as paying $2000 for the course and having somebody tell me to read the book. Granted there are exceptions in content but you get the point.


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## Vol (Jul 5, 2009)

I would have her look into subsidized Stafford loans, Perkins loans, and Pell Grants. Apply for every scholarship under the sun. I would not co-sign if I felt like the possibility for long term debt was in your immediate future.

My oldest son went to a upper scale private college. My youngest son went to a state university.

The private college has a lot of prestige, but that will not help her financially when looking for a job. In most instances in todays world, a private college is not beneficial. Most private colleges are liberal arts colleges. It is hard to get a job with a LA degree in many instances.

You probably already know all of this, just thought it might bear repeating.

Many, many students who take on massive loans by going to private colleges are absolutely sick about it after they graduate and enter the marketplace and start their families and try and purchase a home. I hear it over and over again.

Regards, Mike


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## Hayjosh (Mar 24, 2016)

I would ask what it is about the private college over the public university that she thinks she needs it. And what she wants to major in. If she goes to a public university and actually applies herself, learns, and MAKES CONNECTIONS (this being the most important part), she can be just as much ahead--or more--as she would be if she were at a private college.

Personally, with the cost of college these days, and I say this as a person with a lot of years of college under my belt, I think the cost of private college is a sham.

I don't know your daughter, or how she is, so I can't say if I would co-sign or not. If she goes to college and ends up partying it away then as a parent I'd be really frustrated that I had co-signed. On the other hand, if she goes and makes a hard effort and works at it, I'd consider co-signing.

Then the other piece is, what is the major? If I actually end up with a kid one of these days, and they want to go to college for English, or Russian literature, then I'd question if they're going to end up at McDonald's, why bother with the degree in the first place?

Community colleges definitely can lessen the appeal for certain types of degrees, but there's nothing wrong with a state university. They are the most prolific at publishing research anyway.

Since you're contemplating real estate, you could make her sign and provide her with financial assistance if needed. My parents paid my loan balances during my school years, but when I was out, it was on me.

I also don't understand the rush to get out of college and then immediately buy a house in a few years. I didn't buy my first house until I was out of college for 7 years. And because I had waited that long, I paid my 30 yr mortgage off in 7 years.


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## JD3430 (Jan 1, 2012)

So much to dig into here. I'm in a similar situation.

My son (college freshman) and daughter (high school junior).

My son has a significant athletic and academic scholarship they call "stacking" (some from the athletic dept and more from the academic dept). My daughter actually has better grades, but since she wants to go to an academically better college, will only get an athletic scholarship. Another school that wants her has all kinds of athletic money, but its got a lousy academic rep.

All the scholarship money helps. It will save me and my wife over $200,000, BUT we will still pay a LOT by the time they're done. We will NEVER recover the money. We can only HOPE they graduate nearly debt free and with great jobs.

So what I am saying is this: If your kid is smart (4.0 & 1300 SAT), find a well known college with lower admission standards ( 3.0 & 1100 SAT) and she will get a TON of academic money. If shes "on the borderline" academically, the college has the upper hand.

Hopefully the school your daughter wants to go to is a "FASFA" school or one that gives significant financial aid that doesn't go to far in depth into your finances.

My daughter has 5 or 6 offers. 2 colleges, Lehigh and Bucknell both start out at ridiculous tuition levels, but one offers to look at your financial situation in a better way. Another one recruiting her, Holy Cross, even better. Lehigh counted my company asset depreciation I took against me!! Bucknell did not. Made a big difference.

Another good thing to have is several colleges to chose from, not just one. You can play them against each other to a degree. They view you as a customer, and will fight for your business, so dont be afraid to go bare knuckle with them.

In one way, its better you dont own the farm already. It would "count against you". It makes you look "wealthy" and therefore, you'll pay more. Our real estate holdings made Lehigh impossible for us. We have "land" and "wealth", but not much income.

In general, I agree completely that private colleges are ridiculous. However, if its a BIG name private school, like Vassar, Franklin & Marshall, etc., they have extensive name recognition and a great "good ol boy/girl" network.

One of our friends has a son who plays football for Princeton.

He has a job with a 100,000/yr + starting salary waiting for him upon graduation with barely an interview. Graduating players are hired by alumni in droves. I can assure you, lesser students are hired before better students based on WHERE they went, not always their grades.

As far as buying the farm, have you considered talking to a financial adviser? You may be able to buy the farm as a business, with business money in a corporation?

My corporation debts have not been counted against me when buying real estate. Is it possible to set up a corporation and let the corp borrow the money to buy the farm and the equipment needed for it? Then the corporation could rent the house to you and your wife????

Might sound crazy, but I plan on giving that a try when my time to buy a farm comes.


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## hog987 (Apr 5, 2011)

Maybe you should talk to your daughter about going to trade school instead.
Another thing i encourage young people to do and go and work for a year or two before going to college. You will learn a lot.learn about lots of different jobs out there that they never knew about and might want to do. Also if they work at a low paying dead end job like cashier at walmart they will learn what they dont wsnt to do and work extra hard to get something so they wont have to do the dead end job again.


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## Ray 54 (Aug 2, 2014)

College is vastly overrated in my opinion,and yes I have a college degree. My parents sent me, even though I only ever wanted to farm. But my father never finished high school because he was put to work by his father. Times change and different things are more important to society. And in my day it only cost 4 to $500 per quarter plus living expenses.

I have 3 children and all have degrees. Only one is using hers and it is not a 4 year degree. But with scholarships Pell grants and Community college none of them left school with loan debt. But the oldest would not have his job without a bachelor's degree even though it is outside his degree. He did spend some years doing what his degree is and could go back. But lucked into another field that has been good.

As has been stated, what her goals are, and areas of interest would greatly influence how much money I would help with.

We got lucky with the first one applying for a Pell grant at 17, and having crop losses and the only year I have not paid income tax. With income averaging I got a refund, made him a welfare child  . By the 3rd one we had learned for the cost per unit of college credit a community college was the only way to go. But I guess a private school would be much less inclined to let in transfer students than a state college. Hopefully with inputs from many sources all the different avenues will be revealed to your family.


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## endrow (Dec 15, 2011)

Our children all went to HAAC Harrisburg Community College for a year or two they weren't sure what they would major in anyway . When my youngest daughter moved onto Bloomsburg Unv. She decided on Nursing and the local Hospital offered to pay her way with a commitment for her to come back and work for them . She is soon 40 and is still an RN at that hospital.


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## rjmoses (Apr 4, 2010)

Here's my thoughts: (for what they're worth):

1) Never, ever, under any circumstances, cosign a loan. It's a 99.9999999% chance that you'll get stuck!

2) A recent study I read surveyed 10,000 millionaires and the one thing they had in common was they were all debt free.

3) I took kind of a hard line: If my kids wanted to go to college, they paid for it themselves! I have one who is nuclear engineer, one is a high school history teacher, etc.

4) If you want to help, and you can afford it, "gift" them whatever help you want.

5) Encourage them to have part time jobs, but not student loans. I think of it this way: Why start a career already a quarter of a million in the hole?

6) Most people have absolutely no idea what they want to do for the rest of their lives. Getting a degree boxes a person into something they may hate when they find out what it really entails.

7) I figure I had my shot at influencing them before they turned 18. Once they turned 18, they're adults and on their own. It their time to start making adult decisions.

Just my thoughts.

Ralph


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## PaMike (Dec 7, 2013)

I cant see how these kids can do it with 60-100k in debt. I higher young engineers in the 50k range. Houses in my area are 180k+ to start. The numbers just don't work unless you plan on living in your parents basement for 10 years after college while you pay off debt. The problem is colleges convince these kids you will get this high paid job right out of school and often it just doesn't happen. I remember when I was a senior engineering student in 03 we had a saying "50k to start" cause that's what the school was telling us. In reality my offer out of school was 36k, a far cry from 50k.

If your daughter has a logical head on her shoulders maybe run some numbers with her. Show her how long it takes to pay off X amount of debt. See if she really feels that expensive school is worth it. Another option is to start at a community of state school then transfer to the big name school half way through. You get the big name diploma for way less money.

I have hired a few 20-24 year olds in the last 10 years, and from my point of view the college you graduate from has way less to do with you getting a job than a lot of other factors such as grades, how they interview and how they generally sell themselves with skills, attitude, etc.

I hate to even throw this out there, but as a female, if her long term goals are to get married and raise a family, spending big bucks on a private school vs a state/community college just doesn't pay back. A community college is perfect for someone who wants to land a decent job, but also take 10 years off to raise some kids..


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## Palmettokat (Jul 10, 2017)

On different side of your future the buying the family farm...if from your parents and they are in good health look at buying life insurance on them to pay for or least good bit of the farm when they pass. Yes we all shall pass. Look at buying a policy on each of them, look at buying buying only on one and also look at what is a called a second to die policy. Compare all options. Each has their advantage.

On college...our girls lived at home went to local public university and both got good jobs with their degree. I am amazed at the number of college grads from same school who work in retail stores making less than $10 per hour and then the HVAC guy or the diesel mechanic begin about $30,000 per year here to about $60,000 for the experience diesel mechanic.


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## JD3430 (Jan 1, 2012)

I think college, as originally founded, was a good thing. It was very selective and it taught subjects that required a formal education (doctors, engineers, scientists, etc).

Now there's so many "iffy" majors (liberal arts, parks & recreation, communications, black studies, etc). I think one of the best things to do is ask your kid what they want to major in. If they don't know, or its one of those "iffy" majors, send them to community college until they know what they want to do. That way at least the first 1-2 years are vastly less expensive.


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## Farmerbrown2 (Sep 25, 2018)

Don’t co-sign my cousin co-signed one loan for his daughter for her freshman year. She never asked him to sign again but somehow his name and social security number ended up on her loans for all 4 years. My cousin paid off the first year loan but knew nothing about the other 3 years until he went to buy a new pickup truck. It was a big embarrassing surprise after he test drove a new pickup to find out his credit was wrecked because his daughter had defaulted on the student loan. Apparently she used his social security number and signed his name . He was held responsible for the loans because he signed the first loan and was not keeping an eye on his credit report. He is not the only one that has been down crooked student loan debacle.


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## JD3430 (Jan 1, 2012)

And lets not forget....student loans are government/taxpayer subsidized.

The colleges are in bed with the government.

College worked great for my wife. She went on partial scholarship and got her teaching job immediately after graduating. Shes been a teacher for 25 years. The school district offers to pay for her Masters, so why not take it? That led to a salary increase. Coaching pays her money, too. Their retirement benefits are unbeatable. I'm jealous of what shes done! LOL

I know a farm family. The father sent the sons to school for "Agriculture". I talk to him frequently. He said it was a waste of 1/4 million bucks. Said they all work for him now doing what farmers do-no college education was needed.

It really depends on "what you want to be when you grow up".


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## Gearclash (Nov 25, 2010)

I went to college. Don't borrow money for your child's college education. It's time for them to start pulling their own weight and dealing with the consequences of their own financial decisions. College need to be looked at as an investment. I spend $X on college education, how much more money will make in my life? I'm glad I went to college, but a person has to make it worth it.


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## JD3430 (Jan 1, 2012)

Just give her the money she needs rather than borrow from the government.

1. You wont hurt your ability to qualify for future mortgage

2. You'll pay ZERO interest.

3. You can "gift" up to $15,000/yr tax free

4. You'll avoid the inevitable of paying the loan back for her anyway. Most college grads cant pay it in the first several years. If she has to pay YOU back, you have a little more "leverage"


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## PaMike (Dec 7, 2013)

I know people who have said to their kids "Here is X amount of money for your college education. Any additional expense is on you." If the kid wants to go to expensive school they have more debt than a cheaper school. The problem with that philosophy is that you really aren't guiding the child to the best decision for them, you are just removing yourself (the parent) from the long term financial picture.


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## RockmartGA (Jun 29, 2011)

paoutdoorsman said:


> Youngest daughter is desiring to go to an expensive private college that would result in student loans and/or parent plus loans that my wife's and my names would be attached either directly or as co-signers.


Before I weigh in on this topic, a little about me. My wife and I have two adult children, both went to college, and both came out debt free - due in large part to the GA HOPE Scholarship, which paid a huge chunk of the books and tuition costs if they maintained at least a 3.0 GPA. In my day job, I am a department manager for a fortune 500 company and as a result, I have served on numerous selection committees during the hiring process.

You have to approach this as you would buying a car. The car dealership is in business to sell you a car. If they can talk you into more car than you need, or sell you on extra stuff, they make more money (at your expense). Very often, they play on a person's emotion to sell them more car than they need (I really want that sports car when a sedan is what I really "need").

Colleges are much the same. They are in business to make money and how they do that is to keep a steady supply of students walking through the door. They will sign a student up with crippling debt for degrees that have little or no economic value and they will do so without blinking an eye. They prey on peoples emotions as they know most parents want their children to have a better life than they, and most have bought into the "college graduates make $xxx more in their lifetime than non college graduates.

The colleges have professionally developed brochures and they try to get you on campus for a tour of the facilities. They point out the fitness centers, new dorms, campus green space, and student centers. They brag about some of their successful alumni.

Now, as far as hiring recent college graduates, I would estimate that 90%+ of our new hires in our department are former interns or co-ops. Most hiring managers do not really care where you went to school. After your first job, relevant experience is more important to most managers.

This is a big decision for a 17-18 year old. I get it. Hopefully, your daughter can articulate why she needs to attend this expensive private school instead of say, going to community college and living at home for the first two years and then transferring to a public university for the final two years. Certain institutions are leaders in their field and their students leave the school and go into a highly desirable career. Most are not.


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## Palmettokat (Jul 10, 2017)

Our youngest wanted to go to school to be a chef. Had her heart set on it. Been near twenty years ago so not sure have the number right but think three years and the cost was at that time rather high. Higher than many of our public schools were. It came to my telling her, Honey you have never even worked in a restaurant. You have no idea how hard it is nor the hours you work are the hours you want to be with your family (when that time comes). Told her you got a year to work in restaurant while still in high school, do that and then tell me you want to and we will support you. Funny, what had been a strong passion was never mentioned again. They do need our input but they need to face the reality of their dreams.

Oh she went on to get four year business degree, worked in banking and for large property company. With banks, a teller (no kidding) and with property company did a lot of work with rentals. After few years she married and has been stay at home mom for eleven years. Her youngest begins school this year and will see how she returns to the workforce.


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## CowboyRam (Dec 13, 2015)

The National Guard has some pretty good incentives for college. Had I stayed in the guard longer they would have paid off my entire loan, but I could not stand the politics. It seemed like Colorado Guard was more concerned about how paperwork was to be filled out than actual training. The Colorado Guard also had a up to 75% tuition assistance; most of the time I only got about 50%. I heard on the radio the other day that someone who joins the Wyoming Air Guard they get tuition paid at the University of Wyoming. The guard is not a bad part time job during college.


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## paoutdoorsman (Apr 23, 2016)

Thanks for all the thoughts, ideas, and suggestions. This situation has been weighing heavy on me and my wife. Because of my full time job, she has opportunity to attend a local public university for very little cost while commuting from home. The right financial decision seems obvious to us, but we're trying to keep an open mind and let her work through the different possibilities in her mind. I need to sit down with her and help her put some interest and payback numbers on paper for her to paint a clearer financial picture.


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## CowboyRam (Dec 13, 2015)

paoutdoorsman said:


> Thanks for all the thoughts, ideas, and suggestions. This situation has been weighing heavy on me and my wife. Because of my full time job, she has opportunity to attend a local public university for very little cost while commuting from home. The right financial decision seems obvious to us, but we're trying to keep an open mind and let her work through the different possibilities in her mind. I need to sit down with her and help her put some interest and payback numbers on paper for her to paint a clearer financial picture.


She could also go to a community college and her basics out of the way and then transfer to the college she wants to finish at.


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## paoutdoorsman (Apr 23, 2016)

CowboyRam said:


> She could also go to a community college and her basics out of the way and then transfer to the college she wants to finish at.


Good thought, but because of my employment benefits, community college would be a good bit more $$ than the university.

She is technically a senior in high school this year, but only needed two courses to complete her high school degree requirements. Through a jump start program, she took those at the University in the fall, then additionally completed another course during the winter break, and now has a full course load for the spring term. All of those combined, she'll have almost a year of college credit when she graduates high school in 3 months, so that does knock a year down for her.


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## CowboyRam (Dec 13, 2015)

Kids do seem to be ahead of where we were when we were that age. Just the other day there was a kid on the news that is going to get his high school diploma and his undergraduate from Harvard within a couple weeks of each other.


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## Hayjosh (Mar 24, 2016)

paoutdoorsman said:


> The right financial decision seems obvious to us, but we're trying to keep an open mind and let her work through the different possibilities in her mind. I need to sit down with her and help her put some interest and payback numbers on paper for her to paint a clearer financial picture.


But you have the experience...maybe she needs to keep an open mind.

I'm not saying she isn't. I don't know her. But don't beat yourself up trying to 'keep an open mind.' I do believe there is a time and place for that, and I don't necessarily see this as one of those. The decision she makes here can have consequences that stay with her for a very long time.


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## paoutdoorsman (Apr 23, 2016)

Those consequences are what I really don't want for her. Also I really need to avoid having consequences on myself without being selfish. I'm trying to be different that my folks were I guess. Seems every decision I made or dream I had was met with resistance or negativity. More so from my dad than my mom. We're trying to coach her through the entire thought process positively.


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