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Posted: Fri Jun 16, 2017 7:24 pm
by frozen_tundra9
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Re: Loan from govt or family?
Posted: Fri Jun 16, 2017 9:10 pm
by bokampers
frozen_tundra9 wrote:Hi y'all
Trying to decide how to finance law school. I'm very fortunate to have a scholarship and stipend in a low CoL area so I'm only looking at about $10k/yr in loans for living expenses, which I originally planned to take out as unsubsidized Stafford loans. However, my parents recently offered to lend me that amount each year for law school, at no interest during school, and at 5% once I graduate, to be paid back as soon as I am able and before I buy anything major (ie house, new car, etc.). My family and I get on okay in general, and we had a similar agreement during undergrad, and that worked out well with me paying them back as quickly as possible in full, which is why I'm even considering borrowing this money from my family now. I expect to graduate $30k in debt in total for all three years, potentially even less than that depending on employment over summers and during 2 and 3L.
I believe I'd end up paying $38k if i took stafford loans (1% origination fees and 6.8% interest) versus my parent's $32.5k at 5% that doesn't start accruing until AFTER I graduate, assuming a 2 year repayment period. (If I did the math right...but let's just say there's a reason I didn't go into finance).
Sorry if this seems like a dumb question, but I'm just trying to make sure I've fully thought this through. Is there any reason NOT to take my parents up on this?
Also, If I decline the Stafford loans now (my university just sent me the loan papers) and something happens and my parents can't/won't lend me the money, can I go back and get the same loan amount from the university? Also, I'm considering PI, but by no means set on it, but I'm assuming PLSF wouldn't even be that helpful given that the loan amount is only $30k, yes?
Kind of absurd that your own parents would charge you interest. I'd honestly take gov loans at that point b/c wtf.
Re: Loan from govt or family?
Posted: Fri Jun 16, 2017 9:16 pm
by A. Nony Mouse
bokampers wrote:Kind of absurd that your own parents would charge you interest. I'd honestly take gov loans at that point b/c wtf.
Dude, to each their own.
Re: Loan from govt or family?
Posted: Fri Jun 16, 2017 9:24 pm
by bokampers
A. Nony Mouse wrote:bokampers wrote:Kind of absurd that your own parents would charge you interest. I'd honestly take gov loans at that point b/c wtf.
Dude, to each their own.
Not arguing that. But if it were me, I'd pay the extra 4.5k just to "cut the umbilical cord."
IDK ... if they are the type to charge their own child interest, then are they the type that believe they have a say in his/her matters?
I.e, the restrictions on not buying a house/car before paying them back in full is already an indication of that.
Re: Loan from govt or family?
Posted: Fri Jun 16, 2017 9:26 pm
by A. Nony Mouse
bokampers wrote:A. Nony Mouse wrote:bokampers wrote:Kind of absurd that your own parents would charge you interest. I'd honestly take gov loans at that point b/c wtf.
Dude, to each their own.
Not arguing that. But if it were me, I'd pay the extra 5k just to "cut the umbilical cord."
IDK ... but if they are the type to charge their own child interest, then are they the type that believe they have a say in his/her matters? I.e, the restrictions on not buying a house/car before paying them back in full is already an indication of that.
I don't think charging your kid interest indicates much of anything.
Re: Loan from govt or family?
Posted: Fri Jun 16, 2017 9:27 pm
by bokampers
Guess we'll just chalk it up to different parenting styles
Re: Loan from govt or family?
Posted: Fri Jun 16, 2017 10:10 pm
by acr
I'm with bokampers. Would totally pay the extra $4K for the peace of mind.
Re: Loan from govt or family?
Posted: Fri Jun 16, 2017 10:12 pm
by Barrred
Taking the loan from your parents is a no brainer. Keep the interest payments in the family rather than sending it to some big bank. (I also don't think its weird at all to charge your kid post-graduation interest.)
The only possible reason I can think of for taking the student loan route is if you have absolutely zero credit history, and want to take out a relatively small student loan so that you can establish good repayment history upon graduation. But it sounds like you don't have this problem.
Re: Loan from govt or family?
Posted: Fri Jun 16, 2017 11:51 pm
by rwhyAn
Go with family since the gov't loans are nondischargeable.
Re: Loan from govt or family?
Posted: Sat Jun 17, 2017 12:30 am
by chargers21
I couldn't get my parents or family to loan me money even with interest. I presented it as an investment opportunity, they all declined. I would take the family money, because I personally prefer letting my parents profit off of me than some loan provider
Re: Loan from govt or family?
Posted: Sat Jun 17, 2017 6:32 am
by AJordan
Any implied, *wink wink nudge nudge* "MERRY CHRISTMAS!" loan forgiveness a possibility? If that's like a somewhat extant possibility you should take it from the family.
Re: Loan from govt or family?
Posted: Mon Jun 19, 2017 1:03 pm
by frozen_tundra9
Well this went somewhere I wasn't expecting. My parents are generally cool people and interest on loans is just how we do things in my family. I'm totally, absolutely fine with this, although YMMV obviously. Anyways, thanks for the comments, the point about using student loans to build credit was exactly what I was looking for as it was something I hadn't considered before. Thanks!
Re: Loan from govt or family?
Posted: Wed Jun 21, 2017 8:09 pm
by dannyswo
frozen_tundra9 wrote:Well this went somewhere I wasn't expecting. My parents are generally cool people and interest on loans is just how we do things in my family. I'm totally, absolutely fine with this, although YMMV obviously. Anyways, thanks for the comments, the point about using student loans to build credit was exactly what I was looking for as it was something I hadn't considered before. Thanks!
Save the money, there are other ways to build credit.
Re: Loan from govt or family?
Posted: Thu Jun 22, 2017 1:40 pm
by connordalto
frozen_tundra9 wrote:Well this went somewhere I wasn't expecting. My parents are generally cool people and interest on loans is just how we do things in my family. I'm totally, absolutely fine with this, although YMMV obviously. Anyways, thanks for the comments, the point about using student loans to build credit was exactly what I was looking for as it was something I hadn't considered before. Thanks!
Ya, you can build credit in other ways w/out getting wrecked by a 8% interest rate that begins accruing on day one while your in school. Go with the fam.
Re: Loan from govt or family?
Posted: Thu Jun 22, 2017 4:36 pm
by star fox
frozen_tundra9 wrote:Well this went somewhere I wasn't expecting. My parents are generally cool people and interest on loans is just how we do things in my family. I'm totally, absolutely fine with this, although YMMV obviously. Anyways, thanks for the comments, the point about using student loans to build credit was exactly what I was looking for as it was something I hadn't considered before. Thanks!
Take your parent's money, no brainer.
Keep loan interest in the family, that's a good thing.
If you fall on rough times and have a good relationship with your parents, they will likely just forgive your debt and it'll be gone. A gov't loan will just sit there.
To the guy griping on moderate interest, money has a substantial opportunity cost attached to it. They're already losing money on this deal by only charging 5 % after three years when they could be earning more than that compounding from the start. This is more than a fair deal.
Building credit is whatever, you don't need student loans to build credit. You'll have lots of opportunities to build credit.
Re: Loan from govt or family?
Posted: Fri Jun 30, 2017 7:40 pm
by pyramidenergy888
Borrow from your parents....
Re: Loan from govt or family?
Posted: Wed Sep 06, 2017 8:40 pm
by barReady
pyramidenergy888 wrote:Borrow from your parents....
Borrow from govt now. Your parents are there to help later if needed.
Re: Loan from govt or family?
Posted: Wed Sep 06, 2017 8:42 pm
by blueapple
barReady wrote:pyramidenergy888 wrote:Borrow from your parents....
Borrow from govt now. Your parents are there to help later if needed.
why did you necro this
Re: Loan from govt or family?
Posted: Mon Sep 11, 2017 11:58 pm
by studentloanplanner
One thing about your situation that I didn't see anyone mention is term life insurance to cover the 30k. If you're parents are flush enough to lend to you like no big deal then maybe not an issue for such a small amount. Disability insurance probably not a big deal either for that amount.
If that amount was larger that you were borrowing, say $100,000, and your parents' retirement plans would change if something happened to you (kinda morose but you have to think about everything), then you'd want to protect against that, since federal loans are forgiven in the event of death and disability.
Id echo the comments about being free from your parents especially if there's a significant other in the picture. If you're single and have a great relationship with them, then I'd say go for it and pay that debt back the fastest.