Granddaughter needs $ help for university

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
Topic Author
Almost there
Posts: 908
Joined: Thu Jan 03, 2008 7:06 pm
Location: Arizona USA

Granddaughter needs $ help for university

Post by Almost there » Mon Nov 12, 2018 7:44 pm

My granddaughter just called asking me to co-sign for $15,000 of her college costs for this year. The rest of the college costs ($50,000) are covered by scholarships. She is my first grandchild attending college, is in her first semester, and a very responsible person. Her twin sister opted to work for now and will perhaps start college in the spring. This is the first time she ever asked for help. Their mother raised them by herself since their father (my son) was killed by a drunk driver when they were 15 months old. Her mother originally co-signed but the college didn't accept it (her words). I know her mother is having a difficult time, but that is another story.

So how does co-signing work?

Almost there

User avatar
cheese_breath
Posts: 8972
Joined: Wed Sep 14, 2011 7:08 pm

Re: Granddaughter needs $ help for university

Post by cheese_breath » Mon Nov 12, 2018 7:49 pm

How it works is if she doesn't pay back the loan, you do.

Assuming of course that it's really your grand daughter calling and not someone from central Europe.
The surest way to know the future is when it becomes the past.

User avatar
Toons
Posts: 13410
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

Re: Granddaughter needs $ help for university

Post by Toons » Mon Nov 12, 2018 7:52 pm

:happy

"The person asked to cosign a loan usually has a good credit score and a lengthy credit history, which greatly improves the primary borrower’s odds of approval."

https://www.moneycrashers.com/cosigning ... ons-risks/
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

Snapper
Posts: 95
Joined: Sat Mar 30, 2013 10:23 am

Re: Granddaughter needs $ help for university

Post by Snapper » Mon Nov 12, 2018 7:54 pm

I have been in that situation. To date I have reached for my checkbook. I do not want my grandkids to have debt if I can help it.

J295
Posts: 2182
Joined: Sun Jan 01, 2012 11:40 pm

Re: Granddaughter needs $ help for university

Post by J295 » Mon Nov 12, 2018 7:54 pm

Sorry for the loss of your son, and your DIL challenges now .....

Co-sign means both you and granddaughter are equally liable, so the lender (school) can pursue either of you for payment (they don't have to pursue her first).

Don't know any of the dynamics personally or financially and you didn't ask for input on whether it is a good or poor decision to co-sign in this particular case.

Hope this answers your question.

welldone
Posts: 55
Joined: Sun Aug 17, 2014 2:53 pm

Re: Granddaughter needs $ help for university

Post by welldone » Mon Nov 12, 2018 7:55 pm

Co-signing works by you guaranteeing to pay the debt if your granddaughter doesn't. Does your granddaughter have any means of paying back that $15k? Can you pay that debt if she defaults? Are you willing to risk your credit if she pays late or defaults without telling you so that you have both the credit hit and the debt to repay?

Is your granddaughter already taking the $5500 in federal student loans out (maximum a student can borrow without a co-signer)? Is her freshman year debt actually going to be $20k?

How is she planning on paying for sophomore, junior and senior year? Are you comfortable co-signing for those years as well?

Private loans will have interest accruing immediately, and may also expect payments to be made while the student is in school. Are you willing to make those payments while she is in school?

If you have the money and are willing to gift it, that would be the less risky choice for everyone involved. If you don't have the money available to give, how are you planning on paying it back if your granddaughter can't?
Last edited by welldone on Mon Nov 12, 2018 8:33 pm, edited 1 time in total.

shunkman
Posts: 65
Joined: Mon Feb 26, 2018 9:59 pm

Re: Granddaughter needs $ help for university

Post by shunkman » Mon Nov 12, 2018 7:55 pm

It is my understanding that one should not need a cosigner for a legitimate student loan?

User avatar
LiveSimple
Posts: 1413
Joined: Thu Jan 03, 2013 7:55 am

Re: Granddaughter needs $ help for university

Post by LiveSimple » Mon Nov 12, 2018 7:56 pm

You should cosign, if this is your granddaughter and you can afford to pay the $15,000 if for some reason, she is not able to pay.
Seems like all will pan out well.

Given the situation the granddaughter and her mother may have gone through, since her father is not around, your empathy towards her, will be well appreciated. Who knows when you do need the help of the grand daughter in the future.
Last edited by LiveSimple on Mon Nov 12, 2018 7:58 pm, edited 1 time in total.

User avatar
Will do good
Posts: 871
Joined: Fri Feb 24, 2012 8:23 pm

Re: Granddaughter needs $ help for university

Post by Will do good » Mon Nov 12, 2018 7:57 pm

Can you afford the amount if she doesn't pay up?

What is she studying, hopefully something that can get a job.

If it was me and I can afford it, I would, it's their future.

Silk McCue
Posts: 3496
Joined: Thu Feb 25, 2016 7:11 pm

Re: Granddaughter needs $ help for university

Post by Silk McCue » Mon Nov 12, 2018 7:59 pm

What happens next year?

Cheers

User avatar
arcticpineapplecorp.
Posts: 4528
Joined: Tue Mar 06, 2012 9:22 pm

Re: Granddaughter needs $ help for university

Post by arcticpineapplecorp. » Mon Nov 12, 2018 8:02 pm

you should never co-sign for the reason that welldone stated, namely, if she doesn't pay on time it will adversely affect your credit and you won't know about it until it's too late.

It would be better to do one of two things if you have the resources to pay the $15,000:

You could just give her $15,000 and call it a gift (pay the college directly to make sure it ends up for its intended purpose)
You could pay the $15,000 to the college and have her sign a promissory note to pay you back over a specified time, amount, interest, etc. to make it legitimate.

In the event you need medicaid for long term care within 5 years you should make sure the promissory note is actuarily sound (according to your life span, not hers), has no deferral or balloon payments, is not forgiven upon your death and is paid in equal payments over time period specified.
Last edited by arcticpineapplecorp. on Mon Nov 12, 2018 8:04 pm, edited 1 time in total.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

Theseus
Posts: 620
Joined: Sat Jan 23, 2016 9:40 am

Re: Granddaughter needs $ help for university

Post by Theseus » Mon Nov 12, 2018 8:04 pm

In my books education is the best gift to give anyone - especially a family member. This is a classic definition of teaching someone to fish....so If you can afford to help her with that then I would pay for it. Or perhaps loan her the money with a written agreement that she has to pay you back with interest (IRS will want that if it is a loan) in a specific time frame. So it will be a valuable financial lesson for her as well.

But I am always weary of cosigning and have always declined.

ahnathan
Posts: 59
Joined: Wed Oct 17, 2018 2:10 pm

Re: Granddaughter needs $ help for university

Post by ahnathan » Mon Nov 12, 2018 8:09 pm

Agree that co-signing seems like the least desirable way to manage this. What if she defaults? What if she is just bad at managing it and let’s the interest accumulate in forbearance for years? That 15k could turn into much more.

1. Do you have the money to help her outright?

2. What are the plans for each subsequent year after this one. Is this a 4 year degree? Is her scholarship for all 4 years?

3. What is the degree in? Will she reasonably make this money back?

4. As someone else mentioned, are these federal Stafford loans? If so, she should not need a co-signer correct? So that would mean these are private loans which can have rates as high as 15-20% (I know...). She would essentially be putting 15k on a high interest credit card and we know how that goes....

I would find another way to help her. Getting a degree is important and it’s great to support her. Just need to find the most efficient way.

delamer
Posts: 9344
Joined: Tue Feb 08, 2011 6:13 pm

Re: Granddaughter needs $ help for university

Post by delamer » Mon Nov 12, 2018 8:10 pm

Silk McCue wrote:
Mon Nov 12, 2018 7:59 pm
What happens next year?

Cheers
I think this is key.

To co-sign on a one-time loan for $15,000 —if you can afford to make the payments should your granddaughter default — is not onerous.

But I think you have to assume that she’ll be coming back to you for the next 3 years of her education too. And that means $60,000 in loans and potential payments.

And what if her sister needs help?

I think you need more information and to talk to a financial aid counselor at her school.

fabdog
Posts: 801
Joined: Wed Jan 16, 2013 1:59 pm
Location: Williamsburg VA

Re: Granddaughter needs $ help for university

Post by fabdog » Mon Nov 12, 2018 8:18 pm

What type of school is she attending where the bill is $65K for the year? ($15K loan plus $50K scholarships?)

A state university depending on where you live would be much more affordable... maybe $25K total for a year?

If the issue is getting her a good education... there have to be more affordable choices

Mike

GmanJeff
Posts: 526
Joined: Sun Jun 11, 2017 7:12 am

Re: Granddaughter needs $ help for university

Post by GmanJeff » Mon Nov 12, 2018 8:19 pm

When you co-sign, you're accepting responsibility for the repayment of the loan. If your granddaughter, for whatever reason, repays the loan slowly or not at all, the lender can look to you for repayment, including penalties and any legal fees permitted by the terms of the loan. Your credit worthiness can be affected by how the loan is handled as well, just as if you borrowed the money by yourself alone and had any issues with repayment. If the lender seeks repayment from you, it is your bank accounts and other property at risk if you in turn fail to pay, so you have to be prepared for that possibility.

Co-signing means the lender judges the primary borrower to be insufficiently credit worthy on her own. They do not believe she is a good risk. It appears the same judgment was applied to her mother, since was deemed to be an inadequate guarantor.

While it may seem callous, unless you have the financial resources to repay the loan without any material adverse impact on your own financial well-being, this may be a risk you ought not to take. You are also setting a precedent and may be encouraging potential expectations for future guarantees to both this borrower and, in the future, her sister. You would also be sending a message that spending money you don't have, and which a bank is not optimistic you'll be able to repay if you borrow it, is a good practice.

The borrower probably has alternatives, including working to earn tuition, working for an employer who offers tuition assistance, attending a less expensive institution, and attending a university which offers a better financial aid package which does not require her to take out such a loan. $65K/year is quite expensive for one year of university; attending a community college and transferring to a four-year in-state public institution later would reduce her costs dramatically, as would living at home rather than in university housing (I assume the $65K cost includes on-campus housing).

To be candid, it sounds on the face of it as if your granddaughter has chosen a very expensive school she and her mother cannot afford, a bad choice under their circumstances which should not really become your problem to address for them.

User avatar
cheese_breath
Posts: 8972
Joined: Wed Sep 14, 2011 7:08 pm

Re: Granddaughter needs $ help for university

Post by cheese_breath » Mon Nov 12, 2018 8:21 pm

You said this is your first grandchild attending college. Will there be others? Will you do the same thing for each of them? Can you afford it?
The surest way to know the future is when it becomes the past.

Goal33
Posts: 1033
Joined: Sun Apr 12, 2015 12:30 pm

Re: Granddaughter needs $ help for university

Post by Goal33 » Mon Nov 12, 2018 8:23 pm

Maybe better to just pay for her college... I assume they are your heirs over your DIL anyway.
A man with one watch always knows what time it is; a man with two watches is never sure.

Ilikesparklers
Posts: 59
Joined: Wed Jan 10, 2018 12:27 pm

Re: Granddaughter needs $ help for university

Post by Ilikesparklers » Mon Nov 12, 2018 8:29 pm

I would find out if she has any other more affordable college options. If it's going to be $15K loans/year, that's a lot of money she'll be responsible for paying back

My mother was a single parent, and my grandparents paid for 12 years of private school for me. When it came time for college, I received a lot of financial aid/scholarships, and I graduated with $20K of loans. Upon graduation, my grandparents paid $10K. The other $10K I paid back over the next 6 years.

If you have the money and can afford it, I would help her pay back her loans once she graduates.

Katietsu
Posts: 2539
Joined: Sun Sep 22, 2013 1:48 am

Re: Granddaughter needs $ help for university

Post by Katietsu » Mon Nov 12, 2018 8:32 pm

I would want to make sure this is the best option and all avenues have been thoroughly explored. Even a bright 18 year old can not be expected to work through the finances of a college education themselves. And if Mom is not financially savvy, there may be no one who has done long term planning.

Topic Author
Almost there
Posts: 908
Joined: Thu Jan 03, 2008 7:06 pm
Location: Arizona USA

Re: Granddaughter needs $ help for university

Post by Almost there » Mon Nov 12, 2018 8:43 pm

You all brought up some very good reasons (that's why I came here). And, YES, it was her on the phone. I will need to ask her lots of questions. It is a music scholarship and she is hoping to teach music some day. It's a very reputable university and we went to visit it the day after her HS graduation. At that time, I didn't ask how much it cost since she told me that she was getting a scholarship. Her Mom has never been good with money and I finally gave up since she chose not to listen to me. She has always lived for "the day".

fabdog wrote:
What type of school is she attending where the bill is $65K for the year? ($15K loan plus $50K scholarships?)

A state university depending on where you live would be much more affordable... maybe $25K total for a year?

I also thought it was very costly. It is a catholic university in Ohio.

delamer wrote:
And what if her sister needs help?

I think you need more information and to talk to a financial aid counselor at her school.
Good question about her sister. Presently she is working like crazy (I think it is because she is helping her Mom financially).

arcticpineapplecorp. wrote:
You could just give her $15,000 and call it a gift (pay the college directly to make sure it ends up for its intended purpose)
You could pay the $15,000 to the college and have her sign a promissory note to pay you back over a specified time, amount, interest, etc. to make it legitimate.
I don't mind giving her the $15,000 this year and like some of you mentioned, it might mean for a minimum of 4 years = $60,000 (thank you Silk McCue).

welldone wrote:
Is your granddaughter already taking the $5500 in federal student loans out (maximum a student can borrow without a co-signer)? Is her freshman year debt actually going to be $20k?

How is she planning on paying for sophomore, junior and senior year? Are you comfortable co-signing for those years as well?

Private loans will have interest accruing immediately, and may also expect payments to be made while the student is in school. Are you willing to make those payments while she is in school?
I don't know if she signed up for the $5500 federal student loans. I remember my daughter taking it, but that is 25+ years ago. I will have to ask her what she and her Mom did.

skunkman wrote:
It is my understanding that one should not need a cosigner for a legitimate student loan?
Will look into it too.

The way I look at it, if you co-sign for a loan, one has to be ready to pay for it. The problem now comes in that I am not willing to pay $60,000+ and I still have to help her twin sister too one day.

Again, thank you for all your input and support.

tibbitts
Posts: 9375
Joined: Tue Feb 27, 2007 6:50 pm

Re: Granddaughter needs $ help for university

Post by tibbitts » Mon Nov 12, 2018 8:49 pm

This is a difficult decision. It sounds like you haven't been too involved with the process and that makes it more difficult. It helps if you understand how the situation got to where it is - it sounds like something went wrong, but you don't have the entire story.

sport
Posts: 8567
Joined: Tue Feb 27, 2007 3:26 pm
Location: Cleveland, OH

Re: Granddaughter needs $ help for university

Post by sport » Mon Nov 12, 2018 9:04 pm

Almost there wrote:
Mon Nov 12, 2018 8:43 pm
It is a music scholarship and she is hoping to teach music some day.
If she has a career as a music teacher, she may (probably?) not be able to pay back the loans. There should be much less expensive schools where she can get a music degree.

Jack FFR1846
Posts: 10501
Joined: Tue Dec 31, 2013 7:05 am
Location: 26 miles, 385 yards west of Copley Square

Re: Granddaughter needs $ help for university

Post by Jack FFR1846 » Mon Nov 12, 2018 9:10 pm

fabdog wrote:
Mon Nov 12, 2018 8:18 pm
What type of school is she attending where the bill is $65K for the year? ($15K loan plus $50K scholarships?)

A state university depending on where you live would be much more affordable... maybe $25K total for a year?

If the issue is getting her a good education... there have to be more affordable choices

Mike
Having an actual son in college, I know that there's a very good chance that her in state college would cost $30k (it's this much in my state for in state). They have far less money for scholarships. So her choice could potentially to come up with $15k for the private college or $30k for the state college.

All private college loans (banks, credit unions) will require a cosigner. Giving actual money as a check made out to the college is another way to go.
Bogle: Smart Beta is stupid

User avatar
whodidntante
Posts: 6710
Joined: Thu Jan 21, 2016 11:11 pm
Location: outside the echo chamber

Re: Granddaughter needs $ help for university

Post by whodidntante » Mon Nov 12, 2018 9:17 pm

Teach music? You don't need a quarter million dollar education to earn 40 grand a year.

onourway
Posts: 2091
Joined: Thu Dec 08, 2016 3:39 pm

Re: Granddaughter needs $ help for university

Post by onourway » Mon Nov 12, 2018 9:22 pm

If you are not willing to help her out to the tune of $15k/year, $60k total, plus her sister, I would be very straightforward with what you are willing and able to do, either as a gift or a direct loan to her as outlined earlier. Do not give her everything you can afford in year 1 by co-signing for a loan that neither you nor she can really afford if she needs to do it for 4 years (or more).

OnTrack2020
Posts: 443
Joined: Mon Mar 20, 2017 10:24 am

Re: Granddaughter needs $ help for university

Post by OnTrack2020 » Mon Nov 12, 2018 9:23 pm

I do not understand this at all. It is mid-November with one month to go before Christmas break. How has your granddaughter made it this far along in the term without paying the college? Or did she have some money saved and was able to pay them?

$50,000 divided by 2 semesters, as colleges split the scholarship by term, so $25,000 for Fall and $25,000 for spring from scholarships. That leaves $7,500 per semester for her to come up with, or roughly $1875 per month (August-December) for tuition, room, and board. Where has the money come from for the last 3 months to pay the college? Did she take out a student loan for the $5500 already?? And how is she able to pay for her living expenses?

One of my son's roommates left college last year in October because, evidently, a loan did not go through. Another friend of his moved out after the semester because she couldn't afford it. Most people do some planning for the 1st year, but it's the 2nd, 3rd, and 4th years where they struggle. But your granddaughter is struggling financially in her 1st year. I think you should visit and sit down and find out how to work out a plan, if you are able. It might not be at that particular college, but at least you can come up with a plan that may be reasonable.
Last edited by OnTrack2020 on Mon Nov 12, 2018 9:31 pm, edited 1 time in total.

ClassySDLivin
Posts: 30
Joined: Sat Jan 28, 2017 8:25 pm

Re: Granddaughter needs $ help for university

Post by ClassySDLivin » Mon Nov 12, 2018 9:23 pm

fabdog wrote:
Mon Nov 12, 2018 8:18 pm
What type of school is she attending where the bill is $65K for the year? ($15K loan plus $50K scholarships?)

A state university depending on where you live would be much more affordable... maybe $25K total for a year?

If the issue is getting her a good education... there have to be more affordable choices

Mike
Although not the OP's question, I agree with Mike. The OP said that his granddaughter has never asked for money before. However she is starting out adulthood (or almost since college is an artificial construct with more safety nets than post college adulthood) attending a school that costs over $200k to graduate even if she is diligent and earns a degree in four years (preferably less but I have read the average college grad takes over four years). All this with many U.S. college options that costs many times less and her twin sister making a sound financial decision (to defer eating the marshmallow/start school until she can afford it). If saying no or making her work to pay back the $15k this year is not palatable, another consideration is giving the fiscally responsible sister a chit for a similar co-signing commitment (so that each sister is treated similarly).

Good luck to you and the granddaughter - I hope she can make good use of that expensive diploma!

User avatar
Watty
Posts: 17653
Joined: Wed Oct 10, 2007 3:55 pm

Re: Granddaughter needs $ help for university

Post by Watty » Mon Nov 12, 2018 9:24 pm

Almost there wrote:
Mon Nov 12, 2018 7:44 pm
So how does co-signing work?
It is little different than you directly taking out a loan to pay for her college, that she may pay off for you.

It will also show up on your credit report so that might be a factor if you need to get a new loan like to refinance a mortage.

Don't underestimate the chance that you will have to pay for anything you co-sign for. You need to consider it as a gift, that you might get back some day. Even if you fully expect her to pay it off things can happen like she might not graduate, or she could get sick or die and then you would be responsible for it.

You should also consider what she is getting her degree in.

Helping her get a engineering degree from MIT is one thing but I know a kid that ended up with about $160K in student loans after getting a music degree which was from a fairly prestigious college. The last I heard he was teaching drum lessons in a music store in a strip mall. I would especially not want to have co-signed on his loans.

Almost there wrote:
Mon Nov 12, 2018 7:44 pm
Her twin sister opted to work for now and will perhaps start college in the spring.
Will you be willing and able to help her out too?

If she needs help and you are not able to help her too that could make the family situation awkward and could cause bad blood between the sisters. I would not want to get in the middle of that.

You might have other grandkids too.

As others have said making outright gifts would be a better option if you can afford it and want to. If you do then you may want to give different grandkids different amounts based on a lot of factors and that is reasonable as long as you intentionally want to do that.

LarryAllen
Posts: 1142
Joined: Fri Apr 22, 2016 9:41 am
Location: State of Confusion

Re: Granddaughter needs $ help for university

Post by LarryAllen » Mon Nov 12, 2018 9:27 pm

It's nice of you to help. Good luck to your Granddaughter!

AlphaLess
Posts: 1658
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

Re: Granddaughter needs $ help for university

Post by AlphaLess » Mon Nov 12, 2018 9:28 pm

Almost there wrote:
Mon Nov 12, 2018 8:43 pm
I also thought it was very costly. It is a catholic university in Ohio.
Oberlin is known to pull this type of a thing.
They tend to finance part of the costs by offering a partial scholarship. Long time ago, I had a friend who was in this situation. He needed a full scholarship to attend a college, and Oberlin offered quite a bit, but left some burden for the family.

Financial Aid office told my friend on the phone: "Don't you have an uncle, an aunt, a brother or sister who can co-sign the loan for you"?

For my friend, it was not possible. He instead opted to go to another, similar school, which offered substantially more in grants (vs loan).
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.

AlphaLess
Posts: 1658
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

Re: Granddaughter needs $ help for university

Post by AlphaLess » Mon Nov 12, 2018 9:30 pm

OP: is the school going to ask your Granddaughter to borrow $15K a year? That's a lot of money: $60K.
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.

Dottie57
Posts: 7198
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Granddaughter needs $ help for university

Post by Dottie57 » Mon Nov 12, 2018 9:34 pm

I can’t imagine paying that much for a degree in music / teaching. I would not do it.

Community college for 2 years then transfer to a state school.

User avatar
Watty
Posts: 17653
Joined: Wed Oct 10, 2007 3:55 pm

Re: Granddaughter needs $ help for university

Post by Watty » Mon Nov 12, 2018 9:37 pm

Almost there wrote:
Mon Nov 12, 2018 8:43 pm
It is a music scholarship and she is hoping to teach music some day.
I had not seen this when I made my prior post about the kid I know that got a similar degree.

Even with the scholarships she will have a lot of debt for a degree that she will earn little more than minimum wage with.

Part of the problem is that to teach music in a public school or university would likely require additional classes to get a teaching degree and maybe a masters or doctorate especially for teaching at the college level.

Many public schools have also been cutting back on their music curriculum so when there is a job opening it there will be a lot of competition for it. If she really want to teach it might be better to get a teaching degree with a strong emphasis in music.

I really think the best thing you could do for her would be to help her find a better degree program to switch to in January to get her a degree that leads to better career prospects. This might be a much less expensive program at a state university or even a community college.

AlphaLess
Posts: 1658
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

Re: Granddaughter needs $ help for university

Post by AlphaLess » Mon Nov 12, 2018 9:43 pm

Dottie57 wrote:
Mon Nov 12, 2018 9:34 pm
I can’t imagine paying that much for a degree in music / teaching. I would not do it.

Community college for 2 years then transfer to a state school.
OP might think that way, but for OP's granddaughter, that is a very tough pill to swallow.

With a mother who does not understand finances and living below means, this is going to be tough.

Also, FWIW, going to community college is not always the best option. It is a good, safe, financially conservative option, but not always the best one. Individual circumstances need to be considered.
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.

Dottie57
Posts: 7198
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Granddaughter needs $ help for university

Post by Dottie57 » Mon Nov 12, 2018 9:51 pm

AlphaLess wrote:
Mon Nov 12, 2018 9:43 pm
Dottie57 wrote:
Mon Nov 12, 2018 9:34 pm
I can’t imagine paying that much for a degree in music / teaching. I would not do it.

Community college for 2 years then transfer to a state school.
OP might think that way, but for OP's granddaughter, that is a very tough pill to swallow.

With a mother who does not understand finances and living below means, this is going to be tough.

Also, FWIW, going to community college is not always the best option. It is a good, safe, financially conservative option, but not always the best one. Individual circumstances need to be considered.
Sometimes you can’t have the best. And you must admit that 65k is A LOT for a year in college.

Minty
Posts: 274
Joined: Sun Mar 24, 2013 3:19 pm
Location: NorCal

Re: Granddaughter needs $ help for university

Post by Minty » Mon Nov 12, 2018 9:52 pm

Just today, I co-signed a tuition loan for my child. Her other parent and I are planning to pay it off; it is a 0% institutional loan so it makes no sense to pay cash. This is for a school that costs $74K and change per annum, which is a substantial sum for us. If we weren't planning to pay it off ourselves, we would either just give our child the cash or decline.

I think expensive schools can be worth the cost. But I am nonplussed that the issue is being raised at this late date. We discussed the cost as a family before decisions were made.
Core Four with nominal bonds and TIPS.

J295
Posts: 2182
Joined: Sun Jan 01, 2012 11:40 pm

Re: Granddaughter needs $ help for university

Post by J295 » Mon Nov 12, 2018 9:53 pm

Interesting how this morphed from a question on what cosigning is about, to advising OP that he might consider telling his granddaughter to change majors or go to a different university or a community college.

Most of the comments assume that the worst-case will in fact occur. That is, the granddaughter will not pay a cent of the loan she takes out. Certainly that could happen, and it’s wise to consider the worst case, but I don’t base my decisions, especially with a family member with this type of history, on the worst case for myself.

It is possible that the granddaughter graduates, gets a job, loves her vocation and makes positive contributions to the community, and pays back the loans. All of which might not have been possible without the cosignature of grandfather.

AlphaLess
Posts: 1658
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

Re: Granddaughter needs $ help for university

Post by AlphaLess » Mon Nov 12, 2018 9:56 pm

Dottie57 wrote:
Mon Nov 12, 2018 9:51 pm
AlphaLess wrote:
Mon Nov 12, 2018 9:43 pm
Dottie57 wrote:
Mon Nov 12, 2018 9:34 pm
I can’t imagine paying that much for a degree in music / teaching. I would not do it.

Community college for 2 years then transfer to a state school.
OP might think that way, but for OP's granddaughter, that is a very tough pill to swallow.

With a mother who does not understand finances and living below means, this is going to be tough.

Also, FWIW, going to community college is not always the best option. It is a good, safe, financially conservative option, but not always the best one. Individual circumstances need to be considered.
Sometimes you can’t have the best. And you must admit that 65k is A LOT for a year in college.
If Harvard (or MIT, Stanford, Caltech, etc) was paying $55K for my kid to go there, and I would have to pitch in $10K (all per yea), and my kid was a star STEM student, it would be an ABSOLUTE BARGAIN.
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.

AlphaLess
Posts: 1658
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

Re: Granddaughter needs $ help for university

Post by AlphaLess » Mon Nov 12, 2018 9:57 pm

Minty wrote:
Mon Nov 12, 2018 9:52 pm
Just today, I co-signed a tuition loan for my child. Her other parent and I are planning to pay it off; it is a 0% institutional loan so it makes no sense to pay cash. This is for a school that costs $74K and change per annum, which is a substantial sum for us. If we weren't planning to pay it off ourselves, we would either just give our child the cash or decline.

I think expensive schools can be worth the cost. But I am nonplussed that the issue is being raised at this late date. We discussed the cost as a family before decisions were made.
Wow, $75K a year. What is this? Undergrad? Grad? Law school? MBA?
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.

Dottie57
Posts: 7198
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Granddaughter needs $ help for university

Post by Dottie57 » Mon Nov 12, 2018 9:59 pm

AlphaLess wrote:
Mon Nov 12, 2018 9:56 pm
Dottie57 wrote:
Mon Nov 12, 2018 9:51 pm
AlphaLess wrote:
Mon Nov 12, 2018 9:43 pm
Dottie57 wrote:
Mon Nov 12, 2018 9:34 pm
I can’t imagine paying that much for a degree in music / teaching. I would not do it.

Community college for 2 years then transfer to a state school.
OP might think that way, but for OP's granddaughter, that is a very tough pill to swallow.

With a mother who does not understand finances and living below means, this is going to be tough.

Also, FWIW, going to community college is not always the best option. It is a good, safe, financially conservative option, but not always the best one. Individual circumstances need to be considered.
Sometimes you can’t have the best. And you must admit that 65k is A LOT for a year in college.
If Harvard (or MIT, Stanford, Caltech, etc) was paying $55K for my kid to go there, and I would have to pitch in $10K (all per yea), and my kid was a star STEM student, it would be an ABSOLUTE BARGAIN.
But not amusic education. I would think of helping with Juliard, but not a Catholic College.

P.S. i am Catholic and nephew went to a good Catholic college in St Paul. But there were funds for it before he went.

Minty
Posts: 274
Joined: Sun Mar 24, 2013 3:19 pm
Location: NorCal

Re: Granddaughter needs $ help for university

Post by Minty » Mon Nov 12, 2018 10:08 pm

AlphaLess wrote:
Mon Nov 12, 2018 9:57 pm
Minty wrote:
Mon Nov 12, 2018 9:52 pm
Just today, I co-signed a tuition loan for my child. Her other parent and I are planning to pay it off; it is a 0% institutional loan so it makes no sense to pay cash. This is for a school that costs $74K and change per annum, which is a substantial sum for us. If we weren't planning to pay it off ourselves, we would either just give our child the cash or decline.

I think expensive schools can be worth the cost. But I am nonplussed that the issue is being raised at this late date. We discussed the cost as a family before decisions were made.
Wow, $75K a year. What is this? Undergrad? Grad? Law school? MBA?
Undergrad. Junior year. There may well be a question of whether, in retrospect, our kid would have been better off going to a state school and having grad school paid for, or something. But the kid's parents had expensive educations which were growth experiences and provided the opportunity to earn reasonable salaries. So far, the kid seems to be making the most of it, so no regrets so far.
Core Four with nominal bonds and TIPS.

J295
Posts: 2182
Joined: Sun Jan 01, 2012 11:40 pm

Re: Granddaughter needs $ help for university

Post by J295 » Mon Nov 12, 2018 10:11 pm

Minty. Good for you!

sawhorse
Posts: 3463
Joined: Sun Mar 01, 2015 7:05 pm

Re: Granddaughter needs $ help for university

Post by sawhorse » Mon Nov 12, 2018 11:04 pm

GmanJeff wrote:
Mon Nov 12, 2018 8:19 pm
To be candid, it sounds on the face of it as if your granddaughter has chosen a very expensive school she and her mother cannot afford, a bad choice under their circumstances which should not really become your problem to address for them.

Considering that she has $50k in scholarships, it's quite possible that she would have to pay more going to a state school.

OP, this is a case of what you can afford and what you feel is right for your granddaughter. Are you well off? Do you have other grandchildren that might want the same deal if you give it to this granddaughter?
Last edited by sawhorse on Mon Nov 12, 2018 11:08 pm, edited 1 time in total.

User avatar
celia
Posts: 9858
Joined: Sun Mar 09, 2008 6:32 am
Location: SoCal

Re: Granddaughter needs $ help for university

Post by celia » Mon Nov 12, 2018 11:07 pm

Almost there wrote:
Mon Nov 12, 2018 7:44 pm
My granddaughter just called asking me to co-sign for $15,000 of her college costs for this year. The rest of the college costs ($50,000) are covered by scholarships....Her mother originally co-signed but the college didn't accept it (her words). I know her mother is having a difficult time, but that is another story.
I agree with someone above that something doesn't sound right. Since the colleges I know about want to be paid before the semester begins (I assume they can cancel the registration), I will assume that the $15,000 is the student's cost for the second semester. At $50K +$15K, it appears the student is also living on campus. Why not google the website of the college and start by understanding how much tuition and dorms are for undergrads. A credential will require at least a 5th year (assuming all courses are completed on time and none are dropped.)

It appears to me, that the granddaughter didn't have anyone coach her on the appropriate college to attend for her goals (future K-12 teachers should go to public colleges in their own state, as they know the credentialing rules the most--no benefit to paying for the same credentialing through a private college--the employer won't care). It is less obvious what the granddaughter understood about the financial aspects and if she even applied for financial aid while applying for college. (Financial Aid offices usually first offer $5,500 federal loans without any co-signers needed, then would find grants for someone in her situation (deceased father, mother unable to assist after raising 2 kids alone).

Note that it would be good to include her sister in this discovery of how financial aid works.
Watty wrote:
Mon Nov 12, 2018 9:37 pm
I really think the best thing you could do for her would be to help her find a better degree program to switch to in January to get her a degree that leads to better career prospects. This might be a much less expensive program at a state university or even a community college.
+1
I see this as a 2-step do-over. She needs to see a neutral counselor (not at her college) for career planning and cost-effective ways to reach her goal. If you live near their home, you could pay for a college counselor** there and the girls and the mom and you could get neutral advice (without putting you on the spot to deliver the bad news). Meanwhile, the student should contact the Financial Aid office at her college, especially if she never applied for financial aid, and ask for financial counseling on how to obtain more aid. At the least, she should be aware of what her total out-of-pocket costs would be after 5 years and ask herself how she would ever pay her part back. In other words, try to have her see if she is digging a hole for herself that she will never get out of, even if you or others partly help her. (For example, what if you died before she graduated? Would your estate be liable for the co-signed loan or could she pay it all back after working x years? or What if she dropped out before graduating and had to immediately start paying the loans back but had to do it without a teacher's salary?)

Note: Sometimes it makes sense to continue at a private college if the out-of-pocket cost is less than paying the entire cost at a public college. But if living at home is a possibility, that would save a lot of money at either college.

** the granddaughter's high school counselor might be able to recommend someone
Last edited by celia on Mon Nov 12, 2018 11:13 pm, edited 1 time in total.

User avatar
ClevrChico
Posts: 1559
Joined: Tue Apr 03, 2012 8:24 pm

Re: Granddaughter needs $ help for university

Post by ClevrChico » Mon Nov 12, 2018 11:13 pm

Your granddaughter can't get a direct student loan?

https://studentaid.ed.gov/sa/types/loan ... subsidized

I had a negative net worth starting college, and I needed no cosigner for a direct loan. Uncle Sam paid the interest due to financial need.

FoolMeOnce
Posts: 714
Joined: Mon Apr 24, 2017 11:16 am

Re: Granddaughter needs $ help for university

Post by FoolMeOnce » Mon Nov 12, 2018 11:33 pm

A lot of people seem to be making recommendations based on the retail price of the school. The retail price is irrelevant; the cost to the granddaughter is $15k/year, which is not an outrageous number.

Katietsu
Posts: 2539
Joined: Sun Sep 22, 2013 1:48 am

Re: Granddaughter needs $ help for university

Post by Katietsu » Tue Nov 13, 2018 12:38 am

The odd part is the timing. Also, I thought the most expensive Catholic university in OH was Dayton. They list the total cost per year as less than $58,000 including living expenses. A $50,000 scholarship, $5500 loan with no co signer, and a $3000 summer job should cover it. I would be concerned that the loan proceeds were going to necessities. I see students who are taking out private student loans and using them to buy things like late model cars.

Silk McCue
Posts: 3496
Joined: Thu Feb 25, 2016 7:11 pm

Re: Granddaughter needs $ help for university

Post by Silk McCue » Tue Nov 13, 2018 8:08 am

I see from another post from October of this year that you are taking your first RMD. I did not search other posts to see if you had shared your financials.

The one thing that I know is that if your financial future would be negatively impacted IF your granddaughter defaulted and you had to repay this loan, then regardless of your love for her and your desire to help her, you should not. At this point in your life you cannot put your future financial security at risk as there is no one that you can turn to to bail you out.

Cheers

carolinaman
Posts: 3889
Joined: Wed Dec 28, 2011 9:56 am
Location: North Carolina

Re: Granddaughter needs $ help for university

Post by carolinaman » Tue Nov 13, 2018 9:15 am

delamer wrote:
Mon Nov 12, 2018 8:10 pm
Silk McCue wrote:
Mon Nov 12, 2018 7:59 pm
What happens next year?

Cheers
I think this is key.

To co-sign on a one-time loan for $15,000 —if you can afford to make the payments should your granddaughter default — is not onerous.

But I think you have to assume that she’ll be coming back to you for the next 3 years of her education too. And that means $60,000 in loans and potential payments.

And what if her sister needs help?

I think you need more information and to talk to a financial aid counselor at her school.
I agree. Take the long view of her college costs as well as her sister. This could put you on the hook for quite a large sum. I would have conversation with her and your daughter. I would encourage you to help her if you can, but make sure you understand what her college plans are and the required funding.

My oldest granddaughter went out of state to college which more than doubled her costs. I have helped with that and in my eyes every dollar I give her obligates me to do the same to her younger sister. I can afford it and consider it a good investment for their future.

Post Reply