student loans at low rate secured by a secured account?

[mizliz1011]

My daughter doesn't want me to pay for her graduate school.. and I have mixed feelings but the idea of her taking three more years of debt makes me sick at heart given the interest rates. If I were to set up a three or five year CD securing a loan to her for tuition, made payable to the school, what do you think the lowest interest rate would be... perhaps a $75K loan that would be essentially a line of credit paid out over the next 3.5 years against a collaterized CD. Am I missing something? Would navy do something like that?

 

Looking to keep her from paying high rates and putting herself into debt but want to keep some distance between the give and take in these matters.

 

I know nothing about student loans, she is getting a PhD in Clinical Psych and she is very conservative in financial matters... but i can't stand to see her racking up 8% interest plus while she is going full time and working 20 plus hours a week.

 

All adivice welcome on this. I want to keep some arm's length but help. I may forgive half of it.

[EternalDebtSlayer]

You could just pay off my student loans, since she won't let you pay for her schooling.

 

Mines only about $36,000 now!

[cashnocredit]

My daughter doesn't want me to pay for her graduate school.. and I have mixed feelings but the idea of her taking three more years of debt makes me sick at heart given the interest rates. If I were to set up a three or five year CD securing a loan to her for tuition, made payable to the school, what do you think the lowest interest rate would be... perhaps a $75K loan that would be essentially a line of credit paid out over the next 3.5 years against a collaterized CD. Am I missing something? Would navy do something like that?

 

Looking to keep her from paying high rates and putting herself into debt but want to keep some distance between the give and take in these matters.

 

I know nothing about student loans, she is getting a PhD in Clinical Psych and she is very conservative in financial matters... but i can't stand to see her racking up 8% interest plus while she is going full time and working 20 plus hours a week.

 

All adivice welcome on this. I want to keep some arm's length but help. I may forgive half of it.

 

Student loan interest is, IIRC, tax deductible. A cosigned private loan may not be so the effective interest she would pay would be much less. If she gets a good job she should be able to pay back a SL and it is good experience. It's easier to live frugally before you have developed a taste that higher income brings. It will help her self confidence as well I know your intentions are good but I don't think a cosigned loan arrangement is in your interest or hers.

[mizliz1011]

thank you all for your advice. I think I will pay half of her tuition for three years remaining (paid half this year, last year I contributed but she had more savings)...and let her take loans for the other half, which will be about $12,500.

 

I have had a shakey relationship with her due to an acid divorce and don't want to "buy"her...but the idea of her graduating with huge debt is awful to me as she is so adverse to credit card debt. I may also put her on my 1982 amex if she needs credit assist, but she has her own credit cards from when she was working and PIF each month.

 

She also has a boyfriend who I think she will marry who will be going to law school on loans. He will be going to a top law school to get a top job that will pay well. I am not worried about her paying 'his" loans.

 

Eight percent and higher is criminal for student loans. Just my 2 cents.

[cashnocredit]

thank you all for your advice. I think I will pay half of her tuition for three years remaining (paid half this year, last year I contributed but she had more savings)...and let her take loans for the other half, which will be about $12,500.

 

I have had a shakey relationship with her due to an acid divorce and don't want to "buy"her...but the idea of her graduating with huge debt is awful to me as she is so adverse to credit card debt. I may also put her on my 1982 amex if she needs credit assist, but she has her own credit cards from when she was working and PIF each month.

 

She also has a boyfriend who I think she will marry who will be going to law school on loans. He will be going to a top law school to get a top job that will pay well. I am not worried about her paying 'his" loans.

 

Eight percent and higher is criminal for student loans. Just my 2 cents.

 

What you came up with is excellent. It doesn't encourage dependence but it helps with the high debt burden she would be faced with. And, if things go wrong, it minimizes any relationship damage. Nice job.

[chugs102]

My daughter doesn't want me to pay for her graduate school.. and I have mixed feelings but the idea of her taking three more years of debt makes me sick at heart given the interest rates. If I were to set up a three or five year CD securing a loan to her for tuition, made payable to the school, what do you think the lowest interest rate would be... perhaps a $75K loan that would be essentially a line of credit paid out over the next 3.5 years against a collaterized CD. Am I missing something? Would navy do something like that?

 

Looking to keep her from paying high rates and putting herself into debt but want to keep some distance between the give and take in these matters.

 

I know nothing about student loans, she is getting a PhD in Clinical Psych and she is very conservative in financial matters... but i can't stand to see her racking up 8% interest plus while she is going full time and working 20 plus hours a week.

 

All adivice welcome on this. I want to keep some arm's length but help. I may forgive half of it.

 

 

Save your money. Let your daughter take out the loans. Hopefully, the interest doesn't start compounding immmediately if the loans are subsidized by the government.

 

Wait for her to finish her program and then you can gift her a portion as graduation present.

 

If your daughter is as conservative as you said, then she should be fine. She can keep working 20 hrs a week to make ends meet. It's tough but it's good for her.

[mizliz1011]

still pondering this. The loans DO compound right from the start. I offered to lend her the money but she didn't want to be beholden if something went wrong. She worked 30 hours last week and a full time load and clinics...I pay her to watch my dogs when I go out of town but I don't want her to have debt plus interest and just get the debt or a portion of it back plus all of the compounded interest. I make so little on the cash... If I could open up a secured line of credit backed by a 5 year CD... I have looked at Navy but there doesn't seem to be such a thing.

 

I hate for her to carry a ton of debt walking into her career. I make nothing on the cash and I am not a stock market person- gives me the willies. Or I could give her $5K a year, she will graduate with about $75K of debt, and I can give her cash for a house/wedding. She is overwhelmingly thankful for the gift I gave her and she is still working like a dog. She lives in a hovel with a friend to save money and I leave food packages so she has decent stuff to eat apart from oatmeal. that and a cell phone and netflix/amazon prime and christmas and birthday presents and the dog watching

 

Does she really need to suffer? She has a 4.0 and I don't want her to burn out. She treats drug addicts so its not like ruffling pages of books and writing dissertations.

 

am i being too helicopter?...

Edited October 5, 2014 by mizliz1011

[cashnocredit]

am i being too helicopter?...

 

If you have to ask .....

[mizliz1011]

she generally thinks that I am very distant as her father calls her every day...I set her an email or a text every ten days or so, making sure I have a good reason. I see her maybe once a month. sometimes less,so the issue is worry over her finances vs haunting her.

[cashnocredit]

A joint, CD secured loan makes no sense. You both will get credit dinged if she misses a payment and even though the interest is lower it will still cost her money and you have no benefit at all. If you must just make a loan directly to her at, say, an interest rate half what the bank would charge for this secured CD arrangement. Then you are both better off and neither of your credit files will be damaged if she slips a payment. Do it formally in writing.

Edited October 5, 2014 by cashnocredit