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Student loans - again.

September 24th, 2016 at 07:38 pm

It's been quite a few years since I paid off my student loans. We now find ourselves back in that situation thanks to our daughter's education.

I'm not complaining, though. We were quite fortunate to be able to cover all of the first 2 years of college from her 529 plan and even a chunk of year 3. When it came to paying the balance of about 19K, we had a few options. We could take a Parent PLUS loan. We could take a home equity loan/line. We could pull money from general non-retirement savings. Each had pros and cons. In the end, we opted for the PLUS loan for 15K. We covered the remainder from savings.

Thanks to my new part time job, I'm earning enough that my plan is to pay a minimum of $1,000/month toward that loan starting this month. That won't totally repay it in a year but it'll be most of it. We will need to borrow again for year 4 but hopefully not quite as much. It will all depend on my total income from the new job. In any case, even if we end up borrowing a total of 30K over the 2 years and pay that off in about 30 months, I think that would be pretty reasonable and I'm sure far better than what many families face so I'm thankful for that. If we owe $6,000 when she graduates, I certainly won't complain about that.

DD also took out a $7,500 Stafford loan. She is going to pay $450/month on that while it is in deferment. So that's $5,400/year. Assuming she borrows another $7,500 for senior year, by the time she graduates, she'll only have about $4,200 left to repay. Again, far better than what most college grads face today.

The moral of the story is to start saving for your kids' education as early as you can, even if it doesn't seem like a lot, every little bit helps. We were able to accumulate about 60K in her 529 but any amount is helpful.

Posted in Personal Finance | 5 Comments »

5 Responses to “Student loans - again.”

  1. Jenn Says:
    September 24th, 2016 at 08:25 pm 1474748717
    1474748717

    Steve, thanks for sharing. I'm also paying high college costs for my son. I'm hoping to avoid student loans, but it may not be possible. I'm taking it semester by semester - pulling some from the 529 and cash flowing the rest. But things are tight. So far I'm not willing to scale back retirement savings, but ultimately I might choose to do that temporarily over taking a loan. We'll see.

    I got similar advice years ago from an older parent. He told me not to get overwhelmed by the total cost and do nothing because once the time came for college, I would be thankful for every dollar that was set aside. It's so true.

  2. rob62521 Says:
    September 25th, 2016 at 02:35 am 1474770937
    1474770937

    College bills are scary. Glad you started saving early.

  3. NJDebbie Says:
    September 25th, 2016 at 09:38 pm 1474839536
    1474839536

    We just finished cash flowing our sons' college education. For eight years in a row; we paid between $5k-7k. For one semester, we had both boys in college. Luckily, the youngest was attending a community college and the oldest was on his last semester. We also did not have the expense of room and board so we lucked out there. Good advice, Steve.

  4. klarose Says:
    September 26th, 2016 at 02:18 pm 1474899517
    1474899517

    I guess I'm old fashioned but I won't be paying for my children's college. I may put back a little to help. But as far as priorities go that will be at the very bottom. I think it's good for them to take on that responsibility. I paid for all of my schooling except about $3,000.

  5. debt-free by thir-ty Says:
    September 26th, 2016 at 05:19 pm 1474910395
    1474910395

    That's definitely generous of you, and I hope to be able to help with schooling down the line. My parents were unable to help me. Even with scholarships and need-based aid, I graduated with about 50k in student loans. Considering my school was 50k/yr., I do consider myself lucky to only have to borrow a year's worth of tuition even with no familial help.

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