Borrowing from parents to pay for LS

Discuss various money matters here. Loans (federal and private), scholarships, lottery winnings, or other school finance related information and queries.
User avatar
sojuteacher
Posts: 119
Joined: Tue Sep 07, 2010 11:53 am

Borrowing from parents to pay for LS

Postby sojuteacher » Sun Apr 03, 2011 10:55 am

I'm thinking about just borrowing all of the money to pay for school from my parents, hopefully at a pretty low interest rate (such as 3%).

Anyone gone this route that could share some pros/cons. The huge pro is saving a lot of money because of interest. Except for tax returns, I can't really come up with a downside.

User avatar
BaiAilian2013
Posts: 921
Joined: Sun May 03, 2009 4:05 pm

Re: Borrowing from parents to pay for LS

Postby BaiAilian2013 » Sun Apr 03, 2011 11:02 am

Depending on their age, you might need to pay them back on a shorter schedule than a regular loan since they will probably need the money for retirement.

User avatar
beidoun
Posts: 196
Joined: Tue Jan 26, 2010 11:27 am

Re: Borrowing from parents to pay for LS

Postby beidoun » Sun Apr 03, 2011 11:06 am

If you borrow from your parents then you have no option for any loan forgiveness programs.

sarahlawg
Posts: 1001
Joined: Fri Jun 25, 2010 5:59 pm

Re: Borrowing from parents to pay for LS

Postby sarahlawg » Sun Apr 03, 2011 11:07 am

I had someone borrow a large sum of money from me instead of the bank for 6% interest instead of 12% (or something, they have terrible credit)...worked out great for me and for them.

If I could borrow it from my parents I totally would. Ask them if they will allow you to wait to pay them until after graduation and if the loans will be accruing interest that whole time. Still obviously a better deal though. This is if you're not planning on doing PI, of course. If you are, then think about IBR/LRAP. Those won't count loans from your parents, lol.

User avatar
sojuteacher
Posts: 119
Joined: Tue Sep 07, 2010 11:53 am

Re: Borrowing from parents to pay for LS

Postby sojuteacher » Sun Apr 03, 2011 11:26 am

sarahlawg wrote:I had someone borrow a large sum of money from me instead of the bank for 6% interest instead of 12% (or something, they have terrible credit)...worked out great for me and for them.

If I could borrow it from my parents I totally would. Ask them if they will allow you to wait to pay them until after graduation and if the loans will be accruing interest that whole time. Still obviously a better deal though. This is if you're not planning on doing PI, of course. If you are, then think about IBR/LRAP. Those won't count loans from your parents, lol.


yeah not interested in PI -- should've mentioned it. How did you handle the loan with the person -- a contract?

sarahlawg
Posts: 1001
Joined: Fri Jun 25, 2010 5:59 pm

Re: Borrowing from parents to pay for LS

Postby sarahlawg » Sun Apr 03, 2011 11:29 am

sojuteacher wrote:
sarahlawg wrote:I had someone borrow a large sum of money from me instead of the bank for 6% interest instead of 12% (or something, they have terrible credit)...worked out great for me and for them.

If I could borrow it from my parents I totally would. Ask them if they will allow you to wait to pay them until after graduation and if the loans will be accruing interest that whole time. Still obviously a better deal though. This is if you're not planning on doing PI, of course. If you are, then think about IBR/LRAP. Those won't count loans from your parents, lol.


yeah not interested in PI -- should've mentioned it. How did you handle the loan with the person -- a contract?


Yeah, with a full payment schedule. It was family too (though not as close as you with parents), but our relationship didn't suffer as they always paid on time and never tried to take advantage of me. If you do this, you will need to keep your relationship that way with regards to the money - treat them just like the bank and make sure you always pay on time (or take the late charges). Unless of course this is your parents way of helping you out with LS.

delusional
Posts: 1190
Joined: Thu Jul 15, 2010 7:57 pm

Re: Borrowing from parents to pay for LS

Postby delusional » Sun Apr 03, 2011 11:48 am

My experience: NEVER LEND MONEY YOU CAN'T LIVE WITHOUT. If your parents are like, "we'd like to help you, and it will probably work out, so take a loan from us and pay us back when you can' then go ahead. If your parents are like, "we don't really need the money until we retire in two years, so we can't say no", then that's a great way to tear the family apart.

User avatar
gbpackerbacker
Posts: 634
Joined: Sun May 17, 2009 12:13 am

Re: Borrowing from parents to pay for LS

Postby gbpackerbacker » Sun Apr 03, 2011 11:52 am

delusional wrote:My experience: NEVER LEND MONEY YOU CAN'T LIVE WITHOUT. If your parents are like, "we'd like to help you, and it will probably work out, so take a loan from us and pay us back when you can' then go ahead. If your parents are like, "we don't really need the money until we retire in two years, so we can't say no", then that's a great way to tear the family apart.


This.
Only take the loan if your parents can absolutely live without the money. Nothing is guaranteed in this economy, and you dont want to ruin the rest of your parents' lives to save a coule of % on an interest rate.

User avatar
sojuteacher
Posts: 119
Joined: Tue Sep 07, 2010 11:53 am

Re: Borrowing from parents to pay for LS

Postby sojuteacher » Sun Apr 03, 2011 12:13 pm

gbpackerbacker wrote:
delusional wrote:My experience: NEVER LEND MONEY YOU CAN'T LIVE WITHOUT. If your parents are like, "we'd like to help you, and it will probably work out, so take a loan from us and pay us back when you can' then go ahead. If your parents are like, "we don't really need the money until we retire in two years, so we can't say no", then that's a great way to tear the family apart.


This.
Only take the loan if your parents can absolutely live without the money. Nothing is guaranteed in this economy, and you dont want to ruin the rest of your parents' lives to save a coule of % on an interest rate.


They are well off and could easily pay for my LS if they wanted too -- sigh. It's good that I'll be owning my investment with LS though.

I'm more worried about indebtedness to my parents -- how much that could change our relationship. Overall, it seems like a pretty lucky to have this option though. I'll be saving at least 40K on the interest.

User avatar
kapital98
Posts: 1188
Joined: Sun Jan 09, 2011 9:58 pm

Re: Borrowing from parents to pay for LS

Postby kapital98 » Sun Apr 03, 2011 12:17 pm

sojuteacher wrote:Yeah, with a full payment schedule. It was family too (though not as close as you with parents), but our relationship didn't suffer as they always paid on time and never tried to take advantage of me. If you do this, you will need to keep your relationship that way with regards to the money - treat them just like the bank and make sure you always pay on time (or take the late charges). Unless of course this is your parents way of helping you out with LS.


This is a slippery slope. But, since you're the lender you don't have much to lose... unless your parents are spiteful people :shock:

sarahlawg
Posts: 1001
Joined: Fri Jun 25, 2010 5:59 pm

Re: Borrowing from parents to pay for LS

Postby sarahlawg » Sun Apr 03, 2011 12:24 pm

sojuteacher wrote:
They are well off and could easily pay for my LS if they wanted too -- sigh. It's good that I'll be owning my investment with LS though.

I'm more worried about indebtedness to my parents -- how much that could change our relationship. Overall, it seems like a pretty lucky to have this option though. I'll be saving at least 40K on the interest.


this is what I figured. You could also try the first year and if they're being jerks about holding it over you, you could get your own loans for 2l and 3l. It will change the relationship if you (or they) let it. Personally, I never spoke to my people about the loan after it was made. I only took the money (actually it was all electronic) every month. We talked about all the normal stuff whenever we saw each other. If you will feel bitter about your parents not just paying for it, then you probably shouldn't do it. No doubt it will get harry if you feel like you're paying back something you shouldn't have to.




Return to “Financial Aid”

Who is online

Users browsing this forum: No registered users and 1 guest