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Learning, Sharing, and Teaching => Mini Money Mustaches => Topic started by: MissNancyPryor on January 08, 2020, 12:24:57 PM
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TL;DR Should I pay off my daughter's graduate school loans?
Backstory- Both daughters had undergraduate school 100% paid, zero loans. The eldest decided to do psychology which is essentially useless without a master's. She knew going in, from age 17, that any graduate school expenses would be on her.
She chose a 3-year master's program at a private school. She racked up $120K in student loans to get that.
She, now at age 27, does have a position as a pre-licensed counselor making $52K. Student loan payments are more than double her rent but she is smart and has cranked down her living situation to afford it. She has paid on the loans for 18 months now and plans on having a 10 year accelerated payoff.
The kicker is that (of course) she no longer wants to do counseling and wants to pursue human resources and is working on finding a role. She got the associate PHR but it appears she will probably have to start as a recruiter which will probably require a significant pay cut but at least it gets her on that career ladder, but it has a much higher top end earning potential vs. the counseling. The risk of having to take a pay cut for a while is worth it to get on that other ladder, but is tough with her big student loan payment and it has caused her to be mentally stuck.
With my big run up in net worth I could pay off her student loans. Should I? I do think that it is a great character building and smart financial lesson to have to dig out of your own shit, but I believe that my daughter is smart and has excellent character and would not piss away this gift. I know that I would not have strings attached to the gift but as human nature I would not surprised later to have minor interior thoughts of criticism about one thing or another. I need to make sure that none of that ever pops up and I need to be completely free of it.
I would have to sell stock to come up with the full balance at once but could manage it carefully to avoid triggering big capital gains taxes. I would pay the student loan manager directly to avoid any taxable gift consequences for either of us. That might mean that I do this over a 2 year period with her making payments every month in between.
Am I creating a sense of life-long obligation that will erode our relationship? And, is it too soon to clear this burden for her; does she need a bit more of life's pain to get the pride of doing your own clean up?
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What about agreeing to make payments on her behalf for a set period (1-2 years?) to get her un-stuck? (Or, similarly, pre-paying her loans for that period, so it's very clear that this is when the support ends?)
Seems to me that dealing with the loans has given her some really valuable skills. I'm not sure you want to permanently relieve her of that, particularly so soon in the game.
At the same time, if the weight of the debt is preventing her from pursuing a path that seems to be both a better fit and more remunerative in the long-run, it is reasonable to want to find a way to lift the debt temporarily to give her the space to do so.
Finally, I would also worry a little whether this new path is the permanent one and thus subsidizing it too much. May kids don't know what they want to do until they get into it, so it is reasonable for her to change her mind, and better that she make the shift sooner rather than later. OTOH, she did take on the very significant responsibility of a lot of debt in order to follow that first path, and it's reasonable to expect her to deal with the constraints that debt places on her in deciding whether/when/how to change careers. She does need to "feel" that choices have consequences, and you can't just ignore the money aspect and assume all problems will magically resolve themselves.
All of that means that I do think it's too early in the game to pay everything off, but some temporary support to allow her to make the jump to a more financially rewarding career is reasonable.
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Ugh. I don't have kids of my own, so I don't believe I should have a say in the matter, but I'm interested to see where this discussion goes. Best of luck to you in reaching a decision you can live with.
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does she have the type of student loan where the payment goes down proportional to her new lower income?
i like the idea of helping out by paying the balance but it doesn't have to be all at once. you could do it in chuncks annually while also having your daughter keep up her usual monthly plan.
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@Laura33 you are hitting on the reasons I have not jumped in to do it already. I do believe that she needed to feel the consequences and so timing might be everything.
About the career change I am not at all surprised. When she was 17 and said "psychology" I asked how she thought she would apply that degree, what sort of job did she have in mind. The 17 year old's response was classic "Ohhh, Motherrrrr." with a roll of the eyes. I tried to help her see that her personality is very much one of stubbornness and I thought she would hate to not be able to see how things turned out for most of her patients and that she would loathe it when people continued to do stupid stuff after she counseled them through things. I don't think she really understood the emotional labor she was signing up for even though I absolutely informed her that it would be that way. It is a shame that she didn't figure this out until she spent 1200 hours actually doing counseling, but now she gets it completely. It may have been impossible for her to come to this conclusion without having done that time in the trenches.
Therefore, her decision to move to HR seems exactly like the right move for her because she gets to apply her great empathy for people and her ability to coach others, and in most cases she will get to see closure much more often. It was her idea, and with every failed job application she has asked herself if it is still what she wants and the answer is always "yes." Strongly, yes. But doing recruiter work has her scared.
Spending a while more in the student loan trenches may inoculate her forever against doing dumb things with money and may help her teach her own children well one day.
If I do it it would have to be lump sums. I can't stand the idea of making a monthly payment. I really like the pre-paying idea though to relieve the burden completely for a while, that would be a much better option. I could work with her to find out how to do 2 years worth all at once which would give her the time to get herself re-established in the new career. If she languishes or spends a bunch of her new found excess on candles and organic grass fed beef I would probably not jump in to do more after that. I could feel like I gave her a great gift and it could stand alone.
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does she have the type of student loan where the payment goes down proportional to her new lower income?
i like the idea of helping out by paying the balance but it doesn't have to be all at once. you could do it in chuncks annually while also having your daughter keep up her usual monthly plan.
No, she has the kind that goes UP with a presumably increased income. She would need to refinance to a normal set amortization for pre-payments to work right. When she has made larger payments they have advanced her along the schedule so her payments are getting bumped up (she didn't understand the rules well going in when she chose this graduated option).
I already advised her to get out of that scheme and do a refinance for a consolidated, consistent payment and then hammer the hell out of it. Big, hairy payments are the only way she will kill this thing, but since it is so large it is easy to get bummed out. She has zero other debts, no car payments or credit cards, just these 5 loans that are stupid big when added up.
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I want to add that if my X had not split we would probably have agreed together to pay this off for her while we were both still working, no strings attached. She is a very good daughter and we had a freaking joint high income by the time she was leaving grad school. Now that it is just me and I need to live off my stache for the rest of my life I am being very deliberate about the choice.
I have thought about paying them off as a wedding gift. If she found her person and he is a nice fellow who would have married her anyway with debt then it would be a huge thing to clear it for them as they start a new life. There is currently no batter on deck so that is an unknown timeframe, but say within 5 years those pieces could fall into place.
Just extra thoughts. I don't like that there would be any sort of excalibur test required for paying this off, balanced with the idea that it is good for her to smell her own shit for a bit.
I am going to look into the idea of covering her for a set time so she can make the career change, I am really liking that idea. It seems like it will cover her stuck situation but doesn't completely wipe the slate clean. If she makes the move she can pick up the responsibility again, or if something else changes down the road I can make a new decision to help her clear them.
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Will your other daughter expect the same gift?
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I have thought about paying them off as a wedding gift. If she found her person and he is a nice fellow who would have married her anyway with debt then it would be a huge thing to clear it for them as they start a new life. There is currently no batter on deck so that is an unknown timeframe, but say within 5 years those pieces could fall into place.
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Please, please do not tie this into a wedding. Either do it or don't.
If anything, it'd be more helpful to do it if she remains single. In theory, if she marries, she'll have someone else helping with household income and splitting living expenses.
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I don't see the role of HR to be applying empathy to anyone. Unless it's to sucker employees that ought to be suing their employer for misconduct into thinking someone gives a damn about them.
HR that I've seen is about (a) protecting the employer from employees, (b) protecting the employer and managers from lower ranking employees, and (c) handling benefits packages, with the goal of giving the least possible to the employees to get them to stay at the lowest possible cost, and (d) futzing with insurance companies to the goal of getting them to pay the employees what they promised to.
Maybe I'm jaded after 30 years in the corporate world.
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Will your other daughter expect the same gift?
No, other daughter did not do graduate studies and her profession doesn't require it. She took 5 years to finish undergrad so I already ponied up 25% extra to help her limp through the hardship of the final year plus there was some economic outpatient care sent her way while she figured crap out. She has her head on straight now and also has zero debt. I have asked myself if she would be expecting some six-figure gift but I don't think it would even occur to her. She is a high empathy person who would be happy to see her sister's burden lifted.
The elder one has always been the straight arrow, got a double degree (the other one is sociology, oy veh), graduated 2 quarters early, etc. Deserving.
I think the end result is that they both get to tackle life debt free so it is even.
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I have thought about paying them off as a wedding gift. If she found her person and he is a nice fellow who would have married her anyway with debt then it would be a huge thing to clear it for them as they start a new life. There is currently no batter on deck so that is an unknown timeframe, but say within 5 years those pieces could fall into place.
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Please, please do not tie this into a wedding. Either do it or don't.
If anything, it'd be more helpful to do it if she remains single. In theory, if she marries, she'll have someone else helping with household income and splitting living expenses.
No, not tied to, it would have been a total surprise gift given after the honeymoon. I would never use it as leverage because I would want to be sure the fellow was totally ready to step up as a partner from the outset.
In theory, she could likely be marrying someone who also has student loans. Never know.
The better option is that they are gone before that time even comes.
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I don't see the role of HR to be applying empathy to anyone. Unless it's to sucker employees that ought to be suing their employer for misconduct into thinking someone gives a damn about them.
HR that I've seen is about (a) protecting the employer from employees, (b) protecting the employer and managers from lower ranking employees, and (c) handling benefits packages, with the goal of giving the least possible to the employees to get them to stay at the lowest possible cost, and (d) futzing with insurance companies to the goal of getting them to pay the employees what they promised to.
Maybe I'm jaded after 30 years in the corporate world.
@SwordGuy do you do HR? I would love any tips folks might have on how she can get started.
BTW, I agree with most of what you said- HR's job is to protect the employer, not the employee. Since she is a rule-keeper kind of personality I think she would do well in the HR environment and then after some amount of time she would probably move into a personnel development role to exercise the coaching part of her personality.
But, counseling is no peach. It is grinding her down to a nub. The mother's "I told you so" voice is in the back of my head but I keep my lip zipped. She will get out when she can't stand it any more which may be very soon.
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No, I don't work in HR. This is just based on observation.
in 30 years in the corporate world I only observed evidence of one HR person doing coaching - ever. She was an extraordinary lady who coached her fellow C-level executives. Most of the HR people I've run into were pretty low-level flunkies, i.e., they had a vague idea of what policies and procedures were, anything out of the ordinary would throw them for a loop. FYI, "low-level flunkies" is a judgment of ability, not a statement of their rank in the organization. Some of those flunkies were the head of HR. Then again I may have just been unlucky.
If we do go to Medicare for all, expect the HR profession to shrink big time. It will reduce the need for HR types big time.
Best of luck to you and your daughter.
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Therefore, her decision to move to HR seems exactly like the right move for her because she gets to apply her great empathy for people and her ability to coach others, and in most cases she will get to see closure much more often. It was her idea, and with every failed job application she has asked herself if it is still what she wants and the answer is always "yes." Strongly, yes. But doing recruiter work has her scared.
I do not think that HR is a good fit for this at all. Like @SwordGuy I have never worked with any HR department that resembles this.
What you are describing though is more corporate training than HR.
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Therefore, her decision to move to HR seems exactly like the right move for her because she gets to apply her great empathy for people and her ability to coach others, and in most cases she will get to see closure much more often. It was her idea, and with every failed job application she has asked herself if it is still what she wants and the answer is always "yes." Strongly, yes. But doing recruiter work has her scared.
I do not think that HR is a good fit for this at all. Like @SwordGuy I have never worked with any HR department that resembles this.
What you are describing though is more corporate training than HR.
Corporate training can be a lot of fun, though the better paying career paths typically require a lot of travel. I've only ever done that as an expert consultant brought in to train, never as an inhouse trainer. Not as many inhouse training jobs out there.
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Therefore, her decision to move to HR seems exactly like the right move for her because she gets to apply her great empathy for people and her ability to coach others, and in most cases she will get to see closure much more often. It was her idea, and with every failed job application she has asked herself if it is still what she wants and the answer is always "yes." Strongly, yes. But doing recruiter work has her scared.
I do not think that HR is a good fit for this at all. Like @SwordGuy I have never worked with any HR department that resembles this.
What you are describing though is more corporate training than HR.
Corporate training can be a lot of fun, though the better paying career paths typically require a lot of travel. I've only ever done that as an expert consultant brought in to train, never as an inhouse trainer. Not as many inhouse training jobs out there.
I'm not really sure the career path into inhouse training, either.
Either way, I think that the OP's daughter is setting themselves up for a big letdown if they have such a lofty ambition on HR. Maybe HR at a very small company could be this way (like startup/etc)?
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The specific career choice doesn't really matter in the scheme of my decision to pay toward her loans. It could have been anything else that she lacked experience in and would need to take a pay cut to switch into that new path. I won't be advising her on it being a wise choice or not (see how well I did on the whole psychology thing, ya). She gets to decide. As a side note every full time personnel development person I ever encountered was out of the HR department so maybe that is how she would get started on that track. And the company where she lands may pay for her to take train-the-trainer courses to make that transition if she shows that acumen.
If she decides HR is not good after a while at least she won't be burdened by the loans if she/we can get them whacked. I am pretty certain she will not be going back to counseling in any case. Her time is rapidly approaching to acquire her state license and she is looking at that like some sort of cliff of dread, cementing her desire to get off this career path.
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The specific career choice doesn't really matter in the scheme of my decision to pay toward her loans. It could have been anything else that she lacked experience in and would need to take a pay cut to switch into that new path. I won't be advising her on it being a wise choice or not (see how well I did on the whole psychology thing, ya). She gets to decide. As a side note every full time personnel development person I ever encountered was out of the HR department so maybe that is how she would get started on that track. And the company where she lands may pay for her to take train-the-trainer courses to make that transition if she shows that acumen.
If she decides HR is not good after a while at least she won't be burdened by the loans if she/we can get them whacked. I am pretty certain she will not be going back to counseling in any case. Her time is rapidly approaching to acquire her state license and she is looking at that like some sort of cliff of dread, cementing her desire to get off this career path.
Not sure if she is interested in working with children but... Guidance counselor is not a bad gig for a psych major if you can get it.
I know quite a few psych majors, all with master's degrees. HS Guidance counselor, drug and alcohol counselor, marriage counselor, an actual PhD doctor doing counseling..
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I have no idea as to whether HR is a good career choice for your daughter, or anyone really, so I will just opine on the payoff logistics.
First off:
I would have to sell stock to come up with the full balance at once but could manage it carefully to avoid triggering big capital gains taxes. I would pay the student loan manager directly to avoid any taxable gift consequences for either of us.
The lifetime gift tax exemption is over 11 million. Unless you're a millionaire many times over or plan to be, there is no gift tax concern for upper-middle class early retirees.
Second:
This isn't a binary choice, pay off or don't pay off. You can choose any amount between $0 and $120,000. Some ideas:
- pay off exactly 50% of the debt
- pay off everything except the average loan amount for graduates of 30k or whatever
- a "homemade match program" that matches every dollar she pays above the minimum payment or any threshold you choose
- one 10k lump sum every birthday or Christmas
- ??? your creative idea goes here ???
There are many ways to skin this cat.
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@Paul der Krake- I am thinking about the annual gift limit, isn't it just $30K to avoid taxes?
Thanks for the additional notes on choices, too.
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@Paul der Krake- I am thinking about the annual gift limit, isn't it just $30K to avoid taxes?
Thanks for the additional notes on choices, too.
Nope! This is a myth that needs to die, like death taxes. :)
The annual exemption is $15,000 (30k if married, because each spouse does 15k), per recipient. If you go above that in the year, then it starts counting against the 11-million-and-some-change lifetime exclusion.
This is a good summary:
https://smartasset.com/retirement/lifetime-gift-tax-exemption
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Cool! Thanks-
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My take.
I would not pay. She made this choice. She had plenty of time to research the salary of someone with the degree she attained. In deciding on the private school and the grad degree, she took on the debt herself. It's now in her hands to pay off the debt.
It does sound as if you tried to instill some practicality in her major choice and she out-stuburned you. Well, she gets to pay for winning that one now.
I have 2 kids in college right now. Son #1 is finishing his senior year in engineering. He has about $25k in Stafford loans. HE will pay these. As a matter of fact, my mom asked if she could pay off his loans and I said no. He needs to be responsible for them and learn to adult. Starting salaries in his field are $75-$90k a year. He did an absolute TON of research on majors vs salary before settling on his. He would really liked to go get a physics PhD. He spoke to his Physics professor when he was thinking of doing this. This professor is an MIT PhD and his advice was that he was 20 years too late and he'd be much better off with an engineering degree. As an aside...I'm an engineer and I know a number of physics PhDs. They all got engineering jobs as there were no physics jobs available to them.
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Yes, this is the stark opposite side of the argument. I paid for 100% of my own college (also engineering) and had the wisdom to look way down the line at consequences when choosing my career. It does bother me that she chose this soft-skills career path which forever puts her on a bubble of potential unemployment if economic conditions change. Mental health doesn't pay well even in good times and is considered non-critical when times get tough.
As a long-term thinker and worst case scenario anticipator, I have warned both daughters that they would be wise to use this historical period of low unemployment to make at least one job change, possibly 2, before there is a lame duck president in office. That means they have 3 years to get themselves in a position of being very valuable to their organizations so they would not be the first person out the door in an economic downturn. Frankly, they don't get it. They didn't live through 2000 or 2008 as a worker and can't imagine a time when Indeed would not be filling their e-mail inboxes. They have not been knocked around by life. I am grateful that they managed to keep themselves out of consumer debt at least.
I will talk with the eldest about the consolidation/refinance thing and show her links to SoFi. I plan to go visit her next month and we can have a serious talk about her plans. If she has some clarity I may offer to do the equivalent of pressing "pause" for her by paying a chunk to get her in pre-paid status and see what she does with that gift. It is still enormously generous to give anything at all but if I can help her get over this hump it may be all she needs. If she is still frozen then I will have my answer and that gift will stand alone.
I have always been the Queen of Consequences when raising my girls. I always followed through and they had to face things with zero helicopter parenting. I think the 3-year wild ride we have been through since their father revealed himself to be quite monstrous and destroyed our family has made us cling to each other very tightly now and it is new territory for us all. We will figure it out.
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Not sure if she is interested in working with children but... Guidance counselor is not a bad gig for a psych major if you can get it.
I know quite a few psych majors, all with master's degrees. HS Guidance counselor, drug and alcohol counselor, marriage counselor, an actual PhD doctor doing counseling..
@mm1970 Hey, thanks for the ideas- I will mention this to her. She spent her internships doing counseling with kids, almost exclusively. She volunteered at a child's grief counseling service too as an undergrad. She is really good with "the littles" as she calls them.
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[snip]
FWIW, I think your approach is eminently reasonable. I, too, am the queen of consequences (just ask my DD the reforming spendthrift, who is now at college trying hard to live off of what she saved over the last summer). But the reality is that "consequences" today can be an order of magnitude different from when we were kids. For me, I took on a grand total of $9500 in student loans to cover both college and law school, which qualified me for a job as a baby lawyer that started at $52K (and went up to $57K before I even started). That is a world apart from $120K in loans to qualify for a job that pays that same $52K.
The reality is, sure, we'd have all advised our kids not to pursue a path that requires 3 years' salary just to pay off the loans you needed to get there. But that's water under the bridge. The decision has been made, the loans are there, and the mistake has been realized. So the real question, once you put recriminations aside, is: now what?
In the real world, kids are stupid, and those of us who ended up on a good path did so with a fair helping of good luck along the way. I could have totally screwed up, hated my job, and wanted desperately to quit and do something else -- really, how the hell did I know I'd like practicing law? I did it because I didn't have any better ideas. If I'd hated the job, I'd have needed to suck it up for maybe 18 mos. to get my loans paid off, and then I'd have been completely free. Your daughter has already been working and paying for 18 months and still has six figures left. So the real question is whether you want her to feel the full force and effect of the stupidity of taking out that much debt, even if it sets her a decade behind in her career, or whether you think she's learned the lesson well enough and lift the burden just enough to give her the chance to change course to something that suits her better.
This strikes me very much as the decision between justice and mercy. She made the choice, and she fully deserves to own it and deal with the consequences. But it is also reasonable not to force her to feel the full weight of those consequences over the next two decades when you have the ability to lift just enough of the weight to allow her to move onto a path that will serve her better in the long run.
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Kids need to bounce around and make their mistakes for a few years. This situation all sounds pretty normal.
How about something totally different, you kick in 6k cash to her, and you expect her to put it in a ROTH (and it stays in there). That way near to mid term, she is feeling the pain, hopefully learning, but long term she is building backstop in this account off to the side. You don't mention the other daughters pay grade, but you can make the same offer to both to keep things fair.
Later, say in a decade, once she is on a clear career path/settled path, revisit helping loan re-payment.
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What happens if/when she decides the new field doesn't suit her and she wants to make another big shift?
Ooh, @trollwithamustache Just cross-posted. I like the way she thinks.
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Will your other daughter expect the same gift?
No, other daughter did not do graduate studies and her profession doesn't require it. She took 5 years to finish undergrad so I already ponied up 25% extra to help her limp through the hardship of the final year plus there was some economic outpatient care sent her way while she figured crap out.
Have you considered roughly estimating the "25% extra + EOC" amount that your other daughter has already received and giving that amount as a lump sum to your first daughter to pay towards her student loan?
Disclaimer: I don't have kids. However, I do have sisters and one thing that I really appreciated about my Mom was that she always strived to keep things fair between the three of us.
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Kids need to bounce around and make their mistakes for a few years. This situation all sounds pretty normal.
How about something totally different, you kick in 6k cash to her, and you expect her to put it in a ROTH (and it stays in there). That way near to mid term, she is feeling the pain, hopefully learning, but long term she is building backstop in this account off to the side. You don't mention the other daughters pay grade, but you can make the same offer to both to keep things fair.
Later, say in a decade, once she is on a clear career path/settled path, revisit helping loan re-payment.
@trollwithamustache You know what they say about great minds.
My graduation gift to her was to give her enough to open her Roth, which she did. I realized she would be spending a long time under the crush of debt and would put off investing and doing $3000 all at once to get some VTSAX out of the box on her own would have been too high of a wall. Now the bucket is open for her to add to, plus the great oak is already a seedling. I am glad I did that. The younger daughter will likely get this same gift for her 25th birthday this spring.
I wish I had parents like me back then! ;-)
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What happens if/when she decides the new field doesn't suit her and she wants to make another big shift?
Ooh, @trollwithamustache Just cross-posted. I like the way she thinks.
Hi @Dicey -
I am going into this knowing that whatever I do I have to be clear of any feelings of control about that. I will do, or do not, and endeavor to cut the strings after that. < channelling my inner Yoda > The only choice for me is to either do more or stop based on my own changing conditions and how she embraces the gift, but I would never put it up to her as "test" of her character or fitting into my preferred outcome. I think how the gift is given makes all the difference.
With her personality and brains I would expect any career re-focusing later would include her wanting to do more and earn more rather than slack so that would be a great outcome once the ball and chain is removed.
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Will your other daughter expect the same gift?
No, other daughter did not do graduate studies and her profession doesn't require it. She took 5 years to finish undergrad so I already ponied up 25% extra to help her limp through the hardship of the final year plus there was some economic outpatient care sent her way while she figured crap out.
Have you considered roughly estimating the "25% extra + EOC" amount that your other daughter has already received and giving that amount as a lump sum to your first daughter to pay towards her student loan?
Disclaimer: I don't have kids. However, I do have sisters and one thing that I really appreciated about my Mom was that she always strived to keep things fair between the three of us.
@Eowynd coincidentally the amount spent in the long slog of that 5th year and EOC does equal about 2 years of DD1's loan payments. During the Great Year of Pain (which coincided with the blowup of the family) I know that DD1 was aware that her sister was getting a bigger slice of the parent-pie and we talked about it openly when I initiated the talk.
DD1 had graduated with 2 degrees, 2 quarters early, and for saving all that tuition we continued to provide 6 more months of monthly living stipend plus paid for half of her new (used) car that spring. All of the extra care DD2 required came after that so I tried to show DD1 that the bonuses she received were because she excelled while DD2 was getting bonus support just to stay above the water line. It was a good relationship building conversation.
I always strived to treat them equally, but not the same, trying to be "fair" as you say. Since the elder is a stubborn go-getter and the younger is an empath artsy type that has taken some careful accounting, but mostly it means that I pay close attention to the needs of each and make sure they know they are separate and fully loved.
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[snip]
FWIW, I think your approach is eminently reasonable.
This strikes me very much as the decision between justice and mercy.
@Laura33 Thank you for this. Wise, as always.
I have thought sometimes that it is simple: If I won several million bucks in a lottery I would wipe out the debt in a hot second and then probably get both daughters new cars while I was at it. We would fly first class to Hawaii for a couple weeks and celebrate these last years before they become wives and mothers. Time is short. I am already wealthy in more ways than money and am so grateful that we are intact after the hell we went through-- we did all the emotional labor stuff post-divorce and are bonded.
So, since I have won a lottery of my own making, and the market keeps screaming upward, I can't think of a better way to spend my ridiculous excess. I either start to do these things now while I can watch my girls thrive from whatever gifts I give, or I can give them each double digit millions when I am dead.
I choose now.
The key is WHEN and HOW, timed well to allow them to learn life lessons, feel the hard friction of their choices, and avoid causing unintended consequences.
Thanks everyone for the great replies!
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What happens if/when she decides the new field doesn't suit her and she wants to make another big shift?
Ooh, @trollwithamustache Just cross-posted. I like the way she thinks.
Hi @Dicey -
I am going into this knowing that whatever I do I have to be clear of any feelings of control about that. I will do, or do not, and endeavor to cut the strings after that. < channelling my inner Yoda > The only choice for me is to either do more or stop based on my own changing conditions and how she embraces the gift, but I would never put it up to her as "test" of her character or fitting into my preferred outcome. I think how the gift is given makes all the difference.
With her personality and brains I would expect any career re-focusing later would include her wanting to do more and earn more rather than slack so that would be a great outcome once the ball and chain is removed.
Once upon a time, when I was facing a similar situation in my career, I approached a close friend who was in the inherited-so-much-wealth-she's-never-had-to-work club. When I approached her, she said "Sure, I'll help you. What do you have for collateral?" I owned a rental property in another city, but no fucking way was was I going to give up any portion of that. I thanked her, and proceeded to figure my life out for myself. Soon thereafter, I moved away and we lost touch. Last month, I decided to look her up. We had a great conversation about how her response made me figure out my life for myself. And I eventually did, 'cuz I'm FIRE now, and richer than I ever imagined. (Not rich like her, but plenty rich enough.) She told me that her [smart] grandmother knew people would ask her for money and taught her how to be financially savvy.
BTW, I fully appreciate that it's your money to do as you please with, but you did ask. I just kind of identified with your daughter's position and wanted to share my experience. I have always derived great satisfaction form achieving my own goals, no matter how much of a struggle it was. Or maybe because it was a struggle. I wouldn't have known that if my parents had shown any interest in my career choices or any willingness to solve my problems with $$.
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You sound like a great mom. Your kids are lucky to have you!
Aww, blushing @lhamo. That means a lot.
It is very hard sometimes. I am grateful for my tribe of MMM to offer point and counterpoint on the money stuff.
Thank you (hugs)
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BTW, I fully appreciate that it's your money to do as you please with, but you did ask. I just kind of identified with your daughter's position and wanted to share my experience. I have always derived great satisfaction form achieving my own goals, no matter how much of a struggle it was. Or maybe because it was a struggle. I wouldn't have known that if my parents had shown any interest in my career choices or any willingness to solve my problems with $$.
That is why it is a struggle for me. I did a quick addition of what anyone gave me it was jack-plus-squat. I know that hardscrabble start made me really smart about money which includes not wanting to bail out DD1 for all the reasons you state. Thus the conundrum.
I think that is why I am leaning toward doing just enough to allow a pause for her so she can make a clear choice without this hanging over her, essentially setting up the "what lifelong choice would you make if you didn't have this debt?" so she can make the right career choice that has great odds of sticking. Then, she can pick up the hardscrabble fight again from there, smarter and better positioned.
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BTW, I fully appreciate that it's your money to do as you please with, but you did ask. I just kind of identified with your daughter's position and wanted to share my experience. I have always derived great satisfaction form achieving my own goals, no matter how much of a struggle it was. Or maybe because it was a struggle. I wouldn't have known that if my parents had shown any interest in my career choices or any willingness to solve my problems with $$.
That is why it is a struggle for me. I did a quick addition of what anyone gave me it was jack-plus-squat. I know that hardscrabble start made me really smart about money which includes not wanting to bail out DD1 for all the reasons you state. Thus the conundrum.
I think that is why I am leaning toward doing just enough to allow a pause for her so she can make a clear choice without this hanging over her, essentially setting up the "what lifelong choice would you make if you didn't have this debt?" so she can make the right career choice that has great odds of sticking. Then, she can pick up the hardscrabble fight again from there, smarter and better positioned.
I totally see your point. But I agree that there might be a happy medium. Perhaps you could offer to make her loan payments until she is settled in her new career path. She originally took on this debt because you had valid reasons for not paying for it. The urge to help is strong, but as we both learned in our younger years, a little (or a lot) of adversity can be the fire that hardens the steel, or better yet, creates beautiful diamonds (like us, lol).
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BTW, I fully appreciate that it's your money to do as you please with, but you did ask. I just kind of identified with your daughter's position and wanted to share my experience. I have always derived great satisfaction form achieving my own goals, no matter how much of a struggle it was. Or maybe because it was a struggle. I wouldn't have known that if my parents had shown any interest in my career choices or any willingness to solve my problems with $$.
That is why it is a struggle for me. I did a quick addition of what anyone gave me it was jack-plus-squat. I know that hardscrabble start made me really smart about money which includes not wanting to bail out DD1 for all the reasons you state. Thus the conundrum.
I think that is why I am leaning toward doing just enough to allow a pause for her so she can make a clear choice without this hanging over her, essentially setting up the "what lifelong choice would you make if you didn't have this debt?" so she can make the right career choice that has great odds of sticking. Then, she can pick up the hardscrabble fight again from there, smarter and better positioned.
I totally see your point. But I agree that there might be a happy medium. Perhaps you could offer to make her loan payments until she is settled in her new career path. She originally took on this debt because you had valid reasons for not paying for it. The urge to help is strong, but as we both learned in our younger years, a little (or a lot) of adversity can be the fire that hardens the steel, or better yet, creates beautiful diamonds (like us, lol).
(emphasis mine)
Let me get this right, you want to encourage her to settle in her new career as slowly as possible?
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BTW, I fully appreciate that it's your money to do as you please with, but you did ask. I just kind of identified with your daughter's position and wanted to share my experience. I have always derived great satisfaction form achieving my own goals, no matter how much of a struggle it was. Or maybe because it was a struggle. I wouldn't have known that if my parents had shown any interest in my career choices or any willingness to solve my problems with $$.
That is why it is a struggle for me. I did a quick addition of what anyone gave me it was jack-plus-squat. I know that hardscrabble start made me really smart about money which includes not wanting to bail out DD1 for all the reasons you state. Thus the conundrum.
I think that is why I am leaning toward doing just enough to allow a pause for her so she can make a clear choice without this hanging over her, essentially setting up the "what lifelong choice would you make if you didn't have this debt?" so she can make the right career choice that has great odds of sticking. Then, she can pick up the hardscrabble fight again from there, smarter and better positioned.
I totally see your point. But I agree that there might be a happy medium. Perhaps you could offer to make her loan payments until she is settled in her new career path. She originally took on this debt because you had valid reasons for not paying for it. The urge to help is strong, but as we both learned in our younger years, a little (or a lot) of adversity can be the fire that hardens the steel, or better yet, creates beautiful diamonds (like us, lol).
(emphasis mine)
Let me get this right, you want to encourage her to settle in her new career as slowly as possible?
Nope. I'm suggesting that rather than paying off the loans entirely, MNP might consider just taking over payments for a specific amount of time while her daughter us in transition. For the record, I'm not for it at all, but harping on that won't help work out a solution. I'm brainstorming to help MNP figure out something she and her daughters can live with. I don't believe I stated any kind of timeline, so I'm not quite sure how you got that impression.
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@Laura33 already suggested the monthly payment idea but that is a no-go for me. I am done making monthly loan payments in my life.
I would do a chunk to put her in paid-ahead status to allow a reprieve for some period of time so she could make a wise decision about her career and take the risk of a pay cut to get on a different career ladder. You know how upon graduation Sallie Mae gives you several months to begin paying the loans back so you can get established? This is essentially a do-over of that time period.
Additionally, the beauty of a lump sum gift is that there is no monthly check in from me, even subconsciously, about what she is doing with this opportunity.
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@Laura33 already suggested the monthly payment idea but that is a no-go for me. I am done making monthly loan payments in my life.
I would do a chunk to put her in paid-ahead status to allow a reprieve for some period of time so she could make a wise decision about her career and take the risk of a pay cut to get on a different career ladder. You know how upon graduation Sallie Mae gives you several months to begin paying the loans back so you can get established? This is essentially a do-over of that time period.
Additionally, the beauty of a lump sum gift is that there is no monthly check in from me, even subconsciously, about what she is doing with this opportunity.
I'm with you on the monthly payments - hate them with a passion! I think @Laura33's suggestion is a good one to consider.
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I think paying for a year once she starts her lower paying job would be a great compromise.
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I want to add that if my X had not split we would probably have agreed together to pay this off for her while we were both still working, no strings attached. She is a very good daughter and we had a freaking joint high income by the time she was leaving grad school. Now that it is just me and I need to live off my stache for the rest of my life I am being very deliberate about the choice.
Even though most of the discussion is around helping but not spoiling the kid, creating an awkward relationship, expectations from the sibling etc, I read this as you can't "afford" to pay it all off at once right now.
Of course, the quotes are b/c I'm sure by many definitions you can afford it, but the fact you state the above tells me you know its not without risk to your financial future. I think that (combined with the fact I do agree that she needs to feel the consequences of the loan) means the most logical move is to give the money for a couple years payments/pay down the balance some and refinance to a smaller payment/etc. Of course no gift is final, if she's struggling down the road and your finances are still great you can help again.
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I would not pay. She was an adult and made an adult decision when she borrowed that money.
Now it's time to be an adult and pay of the loan herself. Work a second job, if that's what it takes.
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I did some more thinking about this thread (and I haven't read all of it since I last read it).
In general, I've found it's unwise to help people more than they help themselves.
Offer to pay $1 for every $1 they pay off the principal. Or $2 for every $1 they pay. Add in a cap on a per year basis so you don't get surprised. Let them know if they pay off over the cap in this year you'll count the extra as paid off in the next year so you aren't incentivizing them to delay paying it down.
That way, they are having to work hard to pay it down and you're rewarding them for doing so. But they've also got skin in the game so they'll learn how hard it truly is to get out of massive debt.
Hope that helps!
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@SwordGuy - FYI, OP says the daughter has been paying for 18 months with a payment 2x her rent. I do like your idea of matching what she's paid, but personally I would never tie that only to principle paid.
OP, I bet any gift or help here would be super well-received and not taken for granted based on everything you've said about your daughter and the way she has been raised. I'm not sure how anyone could say that your daughter hasn't felt the pain of this choice in a master's degree. It's not like she got a meaningless degree, her school probably should have done a better job requiring early experience in the field so students know earlier if it's the right choice. She should have chosen a cheaper school if possible, but I bet the last 18 months has taught her that enough. This help would be unsolicited, so it's not like she's got her hands out begging. And 180k in loans is not just a lesson, it's a millstone around her neck. Even if she kept the 52k job she hates, this would be an absolute grind for years and years and years and set her back in many ways.
FWIW, my parents paid for my sister's master's degree and I've never been bothered by that. Mature adults understand that parental assistance isn't a bean counting endeavor. Needs are different and they ebb and flow.
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Thanks everyone for the input. FWIW, when I mentioned that no one gave me anything I should also include that I did pay off my student loans myself with no assistance, my parents did not spend a cent toward my education which is one of the reasons it took me 10 years after high school to go back. My loans were only $35K but that was still a shit ton when my first engineering job only paid about that much. Still, that is not the same proportion as her $52K salary vs. $120K in loans.
You are correct that my daughter has never asked for a nickel of help. She has never whined or demanded or acted like my money was her right. She did this stupid thing and has a small shovel by which she is trying to fill in a big hole. It is only because my net worth has run up so ridiculously that I realize I could (feasibly) pay the whole thing off and it wouldn't hurt me a bit. It is the moral dilemma and unforeseen consequences that I needed to work through.
I have decided to do just enough for now to help her past this career hurdle so she can have a clear mind and make a smart choice that will affect the rest of her life. I may come back in a couple years and tell you all how that turned out just to put a button on it.
Thanks again for chiming in to help me look at all sides thoroughly.
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One place where you may need to be prepared to lean in to help is on the emotional front around job satisfaction. I'm sure you already are, but this could be a big challenge for your daughter based on her already experience and her generation. (I say this as an older sibling millennial who has spent a lot of time here with a younger sibling lately)
Working sucks, jobs suck, some are better than others, but they all suck. Us young'ins were told to follow our passions, etc. which has led to some curious challenges in the workplace. Holding out and being too picky for the perfect career/company/role/etc. Counseling is very emotionally difficult and had some challenges that your daughter wasn't prepared for. HR is also difficult and has challenges, they are just different. I'm not in HR and couldn't do much other than highlight some of the frustrations I have had with corp HR, much like many who have replied. Can you help her go into this career shift with her eyes more wide open this time? Would she be receptive to help? Do you know someone who is in HR or Learning and Development in your professional network or circle of friends? Is there anything you can do, as someone with more life experience, to help your daughter get an inside view view of her possible choice before she makes her big leap.
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I have two sisters and a SIL., all in their 40s, who majored in Psychology. What a freakin' waste of time. One sister actually did work in HR, not because it had any relevance but because it was the highest-paying job she could get with an otherwise useless degree. She did it for 8 years, hated it, got married and has been a SAHM ever since. Other sister ended up being some NYC financial douche's assistant for years but through working for a private equity firm became an analyst. SIL ended up working in the front desk of a hotel briefly before getting married and being a SAHM.
My theory is that Psych attracts young women because young women have a lot of drama in their lives - and my sisters and SIL grew up before social media. We have friends who both have PhDs in psych. One is a therapist and one is a college professor. But -- good grief - who wants to spend their entire 20s in college pursuing a field that may or may not lead to anything?
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I have two sisters and a SIL., all in their 40s, who majored in Psychology. What a freakin' waste of time. One sister actually did work in HR, not because it had any relevance but because it was the highest-paying job she could get with an otherwise useless degree. She did it for 8 years, hated it, got married and has been a SAHM ever since. Other sister ended up being some NYC financial douche's assistant for years but through working for a private equity firm became an analyst. SIL ended up working in the front desk of a hotel briefly before getting married and being a SAHM.
My theory is that Psych attracts young women because young women have a lot of drama in their lives - and my sisters and SIL grew up before social media. We have friends who both have PhDs in psych. One is a therapist and one is a college professor. But -- good grief - who wants to spend their entire 20s in college pursuing a field that may or may not lead to anything?
Her 2 engineer parents (me and X) were deeply concerned with her choice. And I do think her attraction to the field came from drama but not the shallow facebook kind of high school bullshit.
Her grandfather (my FIL) died when she was 17 and his long decline took a toll on the extended family. There was lots of fighting on that side of the family with my narcissist SIL leading the way and all kinds of past transgressions among the 4 siblings surfaced. Horrible time. My daughter thought the family desperately needed to sit down and work out the problems and try to rally for grandpa, especially to support the caregiver fatigue my MIL was going through as his nursemaid. She was ailing herself but couldn't take any time to recover and end up dying only one year later, a complete spiral downward after her work on this earth was done.
So DD pursued psych. She got an extra certification so she could work with death and dying patients and has a medical endorsement which allows her to be part of the care team along side doctors and surgeons. Her internships were at the cancer institute at the major hospital where she lives and her volunteer work was with children grieving the death of parents and siblings. Unfortunately most hospitals want to hire licensed social workers rather than MFTs (government reimbursement rules apparently) so she did not snag a permanent role there and instead has been doing crisis counseling.
That girl has balls. I could not do what she has done and I understand why she wants to leave it. The "I told you so" thing is real in my mind but she is suffering consequences enough. She made the choice to pursue the career from a place of empathy and purpose to help her fellow human.
I have no idea how it is going to turn out but my philosophy is life has always been that People Cope. She will figure it out.
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How demeaning to say young women are making choices about their education because they like drama.
OP, sounds like your daughter has a lot of emotional intelligence. I know several people who went into psychology because of similar strengths in EQ.
Personally I have a degree in middle school math education and have never specifically used that degree, but it's still not meaningless. The masters is the sticking point, not the undergrad psych degree. But regardless, everyone I've known who did case management or crisis counseling did not last more than a couple years. It's excruciatingly difficult.
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How demeaning to say young women are making choices about their education because they like drama.
+1. The young women I know who were drawn to psychology did it because they wanted to help people, and that seemed like an approachable route to do so. I mean, if you want to help people physically, you need med school, residency, six-figure debt (on top of undergrad debt), and all of that; there's a very high barrier to entry at all, and then years of trial and low pay before you are allowed to go out and make a real living at it. But if you want to help people mentally, you can get a psych degree in 4 years and go into counseling, maybe topping out at a MSW for some jobs. So I can see how psych seems both more achievable and the financially better choice.
Also note that girls in general tend to underrate their own talents and abilities. So I bet you're going to see a higher percentage of girls pick the more-approachable psych path, just because they don't think they could make it through med school.
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How demeaning to say young women are making choices about their education because they like drama.
LiveLean didn't say it was because they *like* drama, but because they experience it. IOW, maybe they go into psych to help others avoid the unpleasantness they themselves suffered.
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I'm late to the party, and what you are doing is amazing.
I went through school, rather than using my own noggin, took out well over 6 figures of student loan debt, financed, cars, etc based on the advice of my peers & elders.
It was the pain of having to realize I'd dug myself a hole and the need to pick myself up that set me towards the path of FI.
If you can spare another that pain, awesome --- I am curious if some of the lessons can be imparted in the process? Perhaps request that in return for setting aside payments of the first couple years worth of debt - the kiddo must read Simple Path to Wealth, ChooseFi, etc and leave it at that. If zero cost budgeting & optimizing expenses is your thing - leave an opened ended offer to help setup, quarterly tweak, & optimize (without judgement)
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I want to pile on another vote for putting in as much $ as you helped out your other daughter in her 5th year.
I have siblings, and my parents were sensitive to being fair with distribution. It wasn't all dolled out in even amounts, but say one of them needed help with a down payment to get at 20% and above PMI... a year later I get a gift check to account for that difference. We all get a pretty fair balance and while none of us ask for it, it makes us feel very aware of our connection as a family. I honestly don't need the $, but it is nice that my parents were thinking of it as well as nips any potential feelings of resentment in the bud.
This is especially true if you're trying to help out but don't want it to feel like a crutch. Tying it to a family support affair makes it less of a handout and more of a "we're all in this together"
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I'm closish in age and situation to your daughter and would either match payments made or make a lump sum gift similar what was given to your other daughter if you want to help.
You have already given both of your daughters an amazing gift by paying for undergrad.
I think wanting out of a profession after only 18 months isn't reasonable-try changing the area of concentration, or employers first before hanging it up. If she is dedicated to changing to a lower paying career I would let her struggle a bit. Working through the consequences and ownership of decisions will help her in the future.
I graduated 6ish years ago with ~$100k in debt after paying my way through undergrad and grad and took what I thought was an amazing job offer and moved to a new state. I *absolutely* hated the job and was just crushed by it for 2 years, but because I had the loans I couldn't take an easier or more enjoyable, lower paying job. I got to experience the struggle of finding a new job in a saturated market and deal with job rejections and failed interviews. I eventually fell into an amazing, rewarding position that had I bailed out of the profession (which I had wanted desperately to do) I would have missed out on.
If she were >5 years into her profession, hated it, and wanted to change careers, but was hamstrung by the loans I would say absolutely help out.
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Please don't tie it to marriage, even as a surprise. Think what that would teach your younger daughter. I know this well, as women in my family who are essentially unemployable get regarded for marrying, with house down payments and so on. I used to be jealous until they all got divorced, while frugal partner (okay, husband, but wasn't then) and I are still going strong.
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So, how did this work out? Very nice of you to try to help but I strongly agree with the point about staying in the same field and shifting the focus. HR is not where this person wants to be (I do some HR functions at work)
Obviously it was written at the tippy top of a market that might not return for months or years, did that weigh in?
My god, February seems like a lifetime ago...
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So, how did this work out? Very nice of you to try to help but I strongly agree with the point about staying in the same field and shifting the focus. HR is not where this person wants to be (I do some HR functions at work)
Obviously it was written at the tippy top of a market that might not return for months or years, did that weigh in?
My god, February seems like a lifetime ago...
@HotTubes, using a Batsignal might help with a reply, like this: @MissNancyPryor
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So, how did this work out? Very nice of you to try to help but I strongly agree with the point about staying in the same field and shifting the focus. HR is not where this person wants to be (I do some HR functions at work)
Obviously it was written at the tippy top of a market that might not return for months or years, did that weigh in?
My god, February seems like a lifetime ago...
@HotTubes, using a Batsignal might help with a reply, like this: @MissNancyPryor
ah okay thanks
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Thanks @Dicey.
@HotTubes I gave her a lump sum with no strings. We will see what she does with it. I have encouraged her to keep paying during the relief package interest moratorium since she is fully employed and can drive the principle balance lower. Hiring everywhere is on hold so she is in limbo on the career move.
You are saying she doesn't want to be in HR because you don't enjoy it yourself, or is there something else?
That's very nice of you. I'm fine with HR stuff, but I used to be a defense-side litigator.
Now I work with a lot of progressives - social service types, MSWs, Psych degrees. HR is for business types.
HR types love rules, black and white, cleanly-drawn lines. Social service people are comfortable with ambiguity and aspirations.
There's some overlap (she could be a trainer who teaches other HR people to be more empathetic) but I've found that those fields attract divergent types.
If I were still trying negligence lawsuits, I'd want all psych majors if I'm the plaintiff and all HR people if I'm the defendant.
Lots of exceptions that prove the rule, of course.
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I spent my career in that field and with her master’s degree she has choices. She should find a job less stressful. Maybe as a EAP counselor for companies or doing discharge planning when people leave the hospital.
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Also having worked in HR I agree with @HotTubes , the role of HR is to protect the employer first and foremost.
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So, how did this work out?
I paid off her debt completely in July 2021 in one lump sum. It was just over $130K.
She got a job in HR in 2020 and will take the PHR test shortly to move up in her career. It was exactly the right move for her to get out of therapy and apply her degrees in this way and she is thriving. She remains the solid, kind, and smart woman she has always been. Since moving back to her hometown (yay!) for that HR job she found a really good guy and will probably marry him in 2022. She gobbled up JL Collins' book and has declared she will be retired far earlier than standard retirement age. Good Guy agrees. She has witnessed the power of FIRE and aspires to it.
I also got some really good advice from these boards on how to fill out the 709 form to avoid gift tax.
It all worked out perfectly.
I used the IBKR margin magic to be able to pay this off in one lump without having to sell six figures of stock. I cleared the margin this month and am closing my IBKR account. I should really update that thread, too.
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I'm curious how you will feel if Biden goes ahead and cancels $50K in student loans?
Regardless of the merits of the proposal, I think there would a significant fairness issue.
I think if someone asked the question today. My answer would be not only no but hell no. Pay their student loan for them, or even give them the money. Or just pay off any private student loans they have.
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I'm curious how you will feel if Biden goes ahead and cancels $50K in student loans?
Regardless of the merits of the proposal, I think there would a significant fairness issue.
I think if someone asked the question today. My answer would be not only no but hell no. Pay their student loan for them, or even give them the money. Or just pay off any private student loans they have.
I think it is beyond obscene that they are suggesting such a bailout and therefore I put my money where my mouth is and paid in full. My daughter and those like her should not receive such largesse on the backs of tax payers; her privileged choices should not be paid for by anonymous people who have nothing to do with her life and receive no benefit from her relief. I believe that waiving away enormous debt for so many would make today's inflation look like the nostalgic good old days and that situation will most-affect the poorest people who pay no taxes at all.
If the politician asshats who are trying to buy votes magically write off some amount I will not feel bad that I, a multi-millionaire, missed out. And I will vote them out of office.
Further, the odds of this happening in her specific case were as close to zero as you can get -- these were graduate school loans to a private college and she is white. She isn't on the list. If she was on the list we should resent it. Obscene.
I hope that the coronageddon and the close examination of the crap shoveled at college kids under the label of "higher learning" gets people to stop the madness of insisting that college is required for everyone. It would be nice to see a strong vocational and certificate-driven workforce emerge from the bullshittery of the masses of those holding PhD's in Left Handed Puppetry (h/t Ramsey), who have zero earning ability and no benefit to society other than their teaching Critical Left Handed Puppet Theory to others.
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How demeaning to say young women are making choices about their education because they like drama.
Agreed; they also like shopping!
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I think you'd be giving her a wonderful gift, but are having doubts about if it's the right thing to do.
What is it that would lead you to want to pay her loans? Why would you not?
This isn't related to her loans, but does she think HR is like being a counselor? That she'll use her education in a corporate setting?
My personal approach is that I do not owe my kids an education. However, I'll pay for community college then a state school. Daughter No. 2 applied to some colleges away from home and I let her know that if she can get the cost down to $11,000 a year (local state school costs) we can do it, so she's exploring scholarships, and I told her that if she worked to cover the difference, that's fine, too. Thankfully she's too young to apply for a loan or she might in her haste. I've told them I'll pay for medical or dental school (I'd probably pay for other graduate programs, too), but my reason for that is because I do not think medical school should cost anything. Our country needs doctors, and health is a matter of national security.
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I think you'd be giving her a wonderful gift, but are having doubts about if it's the right thing to do.
What is it that would lead you to want to pay her loans? Why would you not?
This isn't related to her loans, but does she think HR is like being a counselor? That she'll use her education in a corporate setting?
My personal approach is that I do not owe my kids an education. However, I'll pay for community college then a state school. Daughter No. 2 applied to some colleges away from home and I let her know that if she can get the cost down to $11,000 a year (local state school costs) we can do it, so she's exploring scholarships, and I told her that if she worked to cover the difference, that's fine, too. Thankfully she's too young to apply for a loan or she might in her haste. I've told them I'll pay for medical or dental school (I'd probably pay for other graduate programs, too), but my reason for that is because I do not think medical school should cost anything. Our country needs doctors, and health is a matter of national security.
The answers to your questions are within the thread so I won't rehash, but you bring up something that is interesting to me.
If Society (capital S) pays for free college or wipes away student debt we should be able to say which degrees we will support. College that is a pursuit of knowledge but not skill is not a direct benefit to the population and shouldn't be subsidized.
I expect this stance is not popular with the political side most supportive of wiping away the debt, they seem to be far more likely to say "you can't tell me what to do" and "my puppetry degree helped me grow as a person" while also demanding they not be held accountable for that choice. Many seem to look down on those holding 2 year degrees in vocational subjects like welding even though that welder will out-earn them multifold. The elitism is incredible among the loudest voices. (Obviously these are wildly broad statements that don't cover everyone.)
As the payment moratorium was coming to a close (before it was extended again) I heard a report where borrowers were lamenting having to start paying again and they had several snippets from borrowers worried about the change and how life will be very difficult again. What was missing was a question from the interviewer about "what did you study, and can you make money doing that thing you studied?" Instead it was the stereotypical trope of baristas and service staff lamenting that they couldn't bear the thought of having to start paying again. I think for many listening it would only reinforce the idea that the borrowers dug their own holes and they need to wise up and dig out of it themselves, and if the Government (capital G) decides that they need a clean slate it will enrage most average folk. The political ad that shows a homeless veteran along side an angry, entitled millennial nibbling avocado toast is all it would take to scare the crap out of the political set that only looks for ways to stay in office rather than be any true help to the governed.
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I think you made the right decision. The bottom line is if you can afford it without effecting your own retirement then it will be a wonderful gift.
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I'm curious how you will feel if Biden goes ahead and cancels $50K in student loans?
Regardless of the merits of the proposal, I think there would a significant fairness issue.
I think if someone asked the question today. My answer would be not only no but hell no. Pay their student loan for them, or even give them the money. Or just pay off any private student loans they have.
I think it is beyond obscene that they are suggesting such a bailout and therefore I put my money where my mouth is and paid in full. My daughter and those like her should not receive such largesse on the backs of tax payers; her privileged choices should not be paid for by anonymous people who have nothing to do with her life and receive no benefit from her relief. I believe that waiving away enormous debt for so many would make today's inflation look like the nostalgic good old days and that situation will most-affect the poorest people who pay no taxes at all.
If the politician asshats who are trying to buy votes magically write off some amount I will not feel bad that I, a multi-millionaire, missed out. And I will vote them out of office.
Further, the odds of this happening in her specific case were as close to zero as you can get -- these were graduate school loans to a private college and she is white. She isn't on the list. If she was on the list we should resent it. Obscene.
I hope that the coronageddon and the close examination of the crap shoveled at college kids under the label of "higher learning" gets people to stop the madness of insisting that college is required for everyone. It would be nice to see a strong vocational and certificate-driven workforce emerge from the bullshittery of the masses of those holding PhD's in Left Handed Puppetry (h/t Ramsey), who have zero earning ability and no benefit to society other than their teaching Critical Left Handed Puppet Theory to others.
Just wanted to say kudos to you for this.
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therefore I put my money where my mouth is and paid in full.
Just wanted to say kudos to you for this.
Thanks!
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If Society (capital S) pays for free college or wipes away student debt we should be able to say which degrees we will support. College that is a pursuit of knowledge but not skill is not a direct benefit to the population and shouldn't be subsidized.
Hard disagree on this. Having a more educated populace is good for the entire society, full stop. These benefits are wide-ranging and impossible to quantify.
1) In many ways, college is the new high school. About 40% of Americans have undergraduate degrees, equivalent to the percentage of Americans with high school diplomas back in 1940. Free public high schools were pervasive long before that point. To say that high school and age 18 are forever and always the end of public-provided education is arbitrary and silly. And obviously that system is leaving us with an obscene proportion of the citizenry that’s practically illiterate and have no critical thinking abilities.
2) It makes an abundance of sense that as more un-skilled labor becomes automated, there’s more slack in the system for the workforce to shrink, and people will need more education to add value. By the way, that shrinking workforce also buys workers more bargaining power to be treated with dignity even in unskilled work, which is re-balance that is sorely needed these days. Even those for whom college is “not the right fit” still deserve to live with dignity. Stuffing the un-skilled sector of the workforce with more kids who can’t afford to continue their education just perpetuates the ability of the ruling class to exploit desperation to pay slave-wages.
3) I think it’s a great thing for public funds to train software developers and engineers. It’s a great thing for public funds to train plumbers and welders. It’s a great thing for public funds to train therapists and journalists. It’s a great thing for public funds to train artists and writers. It’s a great thing for public funds to just educate someone in philosophy or psychology, even if they become a barista or a bartender, because it makes them a more conscientious citizen (and voter). All of these things are public goods. Measuring people’s contributions to society by their economic output seems fundamentally against the shared values that supposedly bring us to this community.
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If Society (capital S) pays for free college or wipes away student debt we should be able to say which degrees we will support. College that is a pursuit of knowledge but not skill is not a direct benefit to the population and shouldn't be subsidized.
Hard disagree on this. Having a more educated populace is good for the entire society, full stop. These benefits are wide-ranging and impossible to quantify.
1) In many ways, college is the new high school. About 40% of Americans have undergraduate degrees, equivalent to the percentage of Americans with high school diplomas back in 1940. Free public high schools were pervasive long before that point. To say that high school and age 18 are forever and always the end of public-provided education is arbitrary and silly. And obviously that system is leaving us with an obscene proportion of the citizenry that’s practically illiterate and have no critical thinking abilities.
2) It makes an abundance of sense that as more un-skilled labor becomes automated, there’s more slack in the system for the workforce to shrink, and people will need more education to add value. By the way, that shrinking workforce also buys workers more bargaining power to be treated with dignity even in unskilled work, which is re-balance that is sorely needed these days. Even those for whom college is “not the right fit” still deserve to live with dignity. Stuffing the un-skilled sector of the workforce with more kids who can’t afford to continue their education just perpetuates the ability of the ruling class to exploit desperation to pay slave-wages.
3) I think it’s a great thing for public funds to train software developers and engineers. It’s a great thing for public funds to train plumbers and welders. It’s a great thing for public funds to train therapists and journalists. It’s a great thing for public funds to train artists and writers. It’s a great thing for public funds to just educate someone in philosophy or psychology, even if they become a barista or a bartender, because it makes them a more conscientious citizen (and voter). All of these things are public goods. Measuring people’s contributions to society by their economic output seems fundamentally against the shared values that supposedly bring us to this community.
You have made lots of assertions in your list that I didn't say so I presume you are simply stating your opinions rather than arguing mine.
Specific to my thoughts, "direct benefit" is a key phrase I used. More-educated doesn't seem like a goal that benefits society other than sounding noble within the hifalutin cocktail set. I suggest "more skilled" as a better goal for the general population especially as robots take over mundane tasks. Some of those skills are soft, some are STEM, but if society sees direct benefit from it then consideration could be made to pay for them. Having society pay for post-high school personal development is a hard sale to the masses. It is like someone paying for my vacations to Hawaii because it is really good for my soul and makes me a kinder, more generous person (no really, it does). How does that go? It is like peeing on yourself in a dark suit-- you feel warm, but no one else can see it.
I suggest K-12 is where people should learn to be conscientious members of society and learn their civics so they understand how their government works and the importance of voting. Since more than half of the current population never goes to college (your stat) doesn't it seem even more imperative that kids get this on the taxpayer nickel when growing up?
As a GenXer I was part of the first wave of kids whose basic 3 Rs were set aside in favor of touchy-feely stuff that left many of us adrift. Thinking college is the new high school seems to prove the point that there was a crap-ton of basic life skills that was missed in those 12 years. We have lamented on these boards about kids never having a clue about interest, credit cards, savings and retirement ideas. That concept included in the curriculum would make a huge difference and probably make lots of kids rethink taking out the massive student loans in the first place.
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We spend so much time discussing how to say FU to our employers, but far too little on how you deploy your very own green soldiers post-FIRE. It's your money, you get to do whatever [the fuck] you want with it. I do love how much thought you put into the decision and the conclusions you've drawn.
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We spend so much time discussing how to say FU to our employers, but far too little on how you deploy your very own green soldiers post-FIRE. It's your money, you get to do whatever [the fuck] you want with it. I do love how much thought you put into the decision and the conclusions you've drawn.
I agree with this especially in thinking about estate planning. Figuring out how to do good while alive is not just for Bezos and Gates. Now that the charity-begins-at-home decks are cleared just imagine what I could do for someone else who didn't have the advantages of my kids. That will be fun to figure out.
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I have a Ph.D. in Applied Social Psychology and teach full-time at a community college. I am going to push back a little on the idea that a BA in Psychology is worthless. Its true that you cannot be a practicing psychologist with a BA. However, many of my psychology students have done great things with a BA in psychology.
Listen to the bigger pockets podcasts with David Green from 2018 to 2020. He was a psychology major and talked about how he used psychology theory to build his real estate empire. Since COVID-19 he talks about Jiu Jitsu, not psychology.
I would absolutely not pay-off 100% of her loans. I think a matching program would make much more sense. For every dollar that she pays off the loan, you will match dollar for dollar.
It seems like you have your finances figured out, so good for you. However, is it possible that you could have a run of bad luck with health expenses or something and need your daughters help when you are older? It could be a great opportunity for her to reciprocate.
My step sister married a guy who was kind of reckless with real estate in 2008. They filed for bankrupcy in 2010. My dad helped them out and let them stay at his vacation/retirement house for free for about 18 months. My dad has been retired for 10 years now and he is running out of money. He has a pension and social security, but that is a little short of the life he wants to live. My step-sister and brother in law are now back doing very well with real estate. They gave my dad 50K to help him buy a 2nd home for 100K in cash. They do want the 50K back if he sells or he dies. Both parties helped each other out when in need. I think it worked out on both ends.
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It seems like you have your finances figured out, so good for you. However, is it possible that you could have a run of bad luck with health expenses or something and need your daughters help when you are older? It could be a great opportunity for her to reciprocate.
I am sure both of my daughters would step up to help with whatever comfort care or living assistance arrangements I might need but I can't foresee running out of money. If I had to spend $1MM on medical I would probably be so sick from it that my life expectancy would not be the 97 years old my FIRE calculators currently use. Also, if I spent that $1MM there is a pile more behind it to cover normal expenses for whatever time I have left. This is such a good place to be which is part of what made it OK to open the purse strings to pay off the debt in the first place. I realized this gift makes no dent in my life but has really big implications in hers, so why not do good while I am still alive.
I will never forget watching the emotions she went through when she realized the chain was getting cut from her ankles. That was a really good day. She will repay that by living a really good life.
[side note- who gets to do this!!?? I mean really, who gets to relieve someone's burden with a few clicks of a mouse?! FIRE PEOPLE DO, that's fucking WHO!! Back to our regularly scheduled program.]
She said that when I die in 40 years she won't forget this (and the 709 form will remind her) and will make sure it is square with her younger sister as my estate is divided. I don't care how they handle it because there will be ridiculous amounts and more than enough. Plus I will be dead. They get along and the younger one would feel very awkward about being handed such a massive inheritance anyway and will start to give it away immediately. She is not going to quibble over this long-ago gift.
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I'm curious how you will feel if Biden goes ahead and cancels $50K in student loans?
FWIW, due to an inability for the Democrats to compromise, I do not see $50k in student loan relief happening. Even the $10k that Bidden talked about (he did not put forth $50k) is pretty slim chances at this point imo.
They need all 50 Democrats in agreement, which means it needs to be something the more conservative Democrats will agree to. But the progressive Democrats seem to believe in cutting off their nose to spite their face and would prefer nothing rather something less than their desired bills. This is mind boggling to me and results in 0% of their agenda being fulfilled rather than say, 75%.
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My take.
I would not pay. She made this choice. She had plenty of time to research the salary of someone with the degree she attained. In deciding on the private school and the grad degree, she took on the debt herself. It's now in her hands to pay off the debt.
It does sound as if you tried to instill some practicality in her major choice and she out-stuburned you. Well, she gets to pay for winning that one now.
I share this opinion, it was an adult decision that comes with adult consequences.
Nothing wrong with being generous with your kids, but I'd find other areas to be generous.
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My take.
I would not pay. She made this choice. She had plenty of time to research the salary of someone with the degree she attained. In deciding on the private school and the grad degree, she took on the debt herself. It's now in her hands to pay off the debt.
It does sound as if you tried to instill some practicality in her major choice and she out-stuburned you. Well, she gets to pay for winning that one now.
I share this opinion, it was an adult decision that comes with adult consequences.
Nothing wrong with being generous with your kids, but I'd find other areas to be generous.
Since OP has already made her decision, it's a moot point, right? The cool thing about FIRE is there a million ways to do it successfully. Maybe more.
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Sounds like an awesome decision for this situation. I have really enjoyed hearing your thoughts on this.
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I wouldn't pay off her loans. She made the choices. What might be ok would be at Christmas and birthdays to send a check for $1000 and say that you hope it helps reduce her loans. This is something the other daughter could get as well without the use suggestion. DW and I have done this with our kids although since student loans are frozen and DS only has about $25k in debt, we've suggested he pay towards his car loan and he's done that.
If you were to pay off the loan, I might be concerned that she'd think "Now I'm free to get another degree.".
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@Car Jack if you read the update, she has already done it.