Thursday, November 30, 2006

Repaying my debts to the people I owe the most

If you look at my NetWorthIQ statement, you will see that currently, I owe the most money to Sallie Mae. She's helped me fund a high caliber education and got me that shiny degree.

But even more than Sallie, my parents paid for my four years at college, and since my fancy degree has gotten me well-paid, it's important to me to use that money to pay for my fancy degree.

So I've talked with my parents, and I'm going to repay their outstanding $15,000 PLUS loan that they took out to pay for my senior year of college.

I realize that:

a) This is a lot of money.
b) My parents have more money than I do, (There's two of them and only one of me.)
c) I already have a bunch of debt.
d) Yes, I am fully aware I still have a negative net worth.

But this is something that is important to me, and I don't want my parents dragging around a 15 year debt, especially going into retirement, which they incurred for me and which I am more than able to assume.

Probably how this is actually going to work is that I am going to save my pennies for a while and just write them checks, since it would be an altogether mess to actually transfer the loan to my name. So that is where most of my CashDuck earnings will be going.

Would you do it for your parents if you were in my situation?


HC said...

My parents agreed to take out a loan similar to the PLUS loan when I went to undergrad. They covered that and some of the semester billing shortfalls, and I agreed that I would pay everything else from my own scholarships and loans and from my campus jobs. And we held to that agreement after I graduated.

I did take the loan over while in grad school, because I needed to file under my own name in order to get the deferment, but I basically just paid the interest. (Yes, that was stupid, and probably on my short list of "worst money moves.") They insisted on taking it back after I finished school, though.

It's now a few short months from being paid off, and it's the best gift they ever gave me.

So, I guess my answer is no (unless I had some big windfall), but I greatly admire you for insisting on this.

Ms. MiniDucky said...

The statement "especially going into retirement" has a lot to do with how I see this. I might have waited just a little longer to let the new job/raise go into effect, and yes, they must have expected to be responsible for that debt, but ultimately, I would do the same. It's not going to prevent you from putting food on the table, and it's coming from your CashDuck earnings anyway so there's really no good reason not to.

Good on you, Kira!

Wendy said...

I've never seen you post your networthiq statements on this blog, but it sounds like you've got a manageable amount of student loans in your name, if the $15k you owe your parents is less than the amount you owe SallieMae. You always hear horror stories about 22 year olds graduate with $80k or more in debt. The (comparatively) low amount of total debt in combination with the other reasons you list make me agree with you -- I think it is absolutely right that you take on the remainder of the debt.

That said, I think many or even most recent grads don't feel the same sense of responsibility for their education expenses, and would probably not make the same decision you did. Like the commenter above I greatly respect this decision.

D said...

Kira, yes I would pay the bill. I am so proud of you. This was a hard and large decision to make. It's kind of nice to be able to help your parents after all, they have been there for you.

As the parent, no zing against your parents - just a comment on me personally, I would match my childs payments to this loan or at least continue my regular payments. Why? Because my child 1.did the right thing. 2. I still want to help them. 3. with the debt gone faster we will all be in a better place quicker.

Either way you both win!

Amber said...

Hands down I would take it back over. When I would do that I couldn't tell you since my mom wasn't able to take out a PLUS loan and it's all been just me. But I would totally feel responsible for the loan regardless of who took it out. I think that's great that you're doing it. Though I do agree with the other comment that said perhaps you should wait a month or two at the new job before taking it on. Even though you're going to use your CashDuck earnings. Just my two cents.

ambellamy said...

My mom didn't give me a dime for college... everything i needed, i got myself...

occasionaly she would give me $100 for books if they were outrageous a symester or so... or if i was in a bind, she would loan me what i was short (1600 bucks) and i would instantly begin to repay her back.

She looked at it as a way to save me money (no interest) because she could not afford to contribute to my college (she's a waitress and i'm the youngest and old member of my entire family to go to college... and i'm attending a private school...

but amazingly through the grace of God and hard work (and a lot of 56 hour weeks and good budgeting skills early on)...

I have no loans right now... i'm a junior (graduating next dec) and i've got all the momey i need to finish out my BA and books...

But i don't think i would have let my mom take the loan if she offered...

SF Money Musings said...

that's really thoughtful of you to repay the loan!

i wouldn't let my parents take out a loan for me. they have enough burdens as it is. but if they did offer to pay for my schooling then i'd definitely pay them back.

Single Ma said...

"Would you do it for your parents if you were in my situation?"

You're not doing it for your parents. You're doing it for yourself. It was YOUR education. Unless your parents are wealthy, which I assume they are not since they took out loans for your education, then yes you should repay the loan (if you can afford it, of course).

From the perspective of a parent, I probably wouldn't want my child to spend her newly earned income to repay loans that *I* decided to take out for her. Especially if she has her own pile of education debt.

I'd just be proud that she found a job she enjoys and earn a decent salary, which makes the debt worthwhile.

I'd want her to focus on paying her own student loans first, then *help* repay the loans I took out for her if there's any left when that time comes.

Clink said...

Can't say for sure if I'd pay it back or not. Tell the truth, though, my mom wouldn't have been able to take on out anyway, so the issue has/would never come up. I have paid off loans and cc debt of my mother's with my scholarship money.

I really like D's solution. That would be something I would do with my kid. Go halfers or more.


mimi botkin said...

I am so proud to be your mother (so much for anonymity).

I love reading your blog. I also find the responses from the other bloggers fascinating.

Your little mom

Anonymous said...

I thought I was the only person in this boat...

I went to a state school, had $5k in scholarships, and paid for my food/cell phone/books/gas as well as the summer rent on my college apartment, and my parents took out PLUS loans to help pay for my education. They are currently paying on the student loans in MY name (currently around $11k) and on their PLUS loan (I think this amount is about $2k. Not sure though.)

I am always offering to take up, at LEAST, my own loan payment ($97/mo.) but they constantly refuse. So far the only thing they've accepted was a $63 transfer from my Upromise account.

It worries me because they are paying my younger brother's loans too - he is a year younger than me, went to a more expensive school, spent 5 years there, etc... To top things off, my youngest brother is about to graduate from high school in 2 years. Not sure if he's college material, but still...

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