Author Topic: Paying off daughter's student loans  (Read 2608 times)

MissNancyPryor

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Paying off daughter's student loans
« on: January 08, 2020, 12:24:57 PM »
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? 
   

 

Laura33

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Re: Paying off daughter's student loans
« Reply #1 on: January 08, 2020, 01:24:32 PM »
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.

Dicey

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Re: Paying off daughter's student loans
« Reply #2 on: January 08, 2020, 02:16:34 PM »
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.

cchrissyy

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Re: Paying off daughter's student loans
« Reply #3 on: January 08, 2020, 02:16:52 PM »
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.

MissNancyPryor

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Re: Paying off daughter's student loans
« Reply #4 on: January 08, 2020, 02:24:12 PM »
@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.       

MissNancyPryor

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Re: Paying off daughter's student loans
« Reply #5 on: January 08, 2020, 02:29:19 PM »
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.   

MissNancyPryor

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Re: Paying off daughter's student loans
« Reply #6 on: January 08, 2020, 02:44:44 PM »
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.       

GizmoTX

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Re: Paying off daughter's student loans
« Reply #7 on: January 08, 2020, 03:01:28 PM »
Will your other daughter expect the same gift?

MoseyingAlong

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Re: Paying off daughter's student loans
« Reply #8 on: January 08, 2020, 03:10:39 PM »
.....
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.
.....     

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.

SwordGuy

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Re: Paying off daughter's student loans
« Reply #9 on: January 08, 2020, 03:30:56 PM »
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.

MissNancyPryor

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Re: Paying off daughter's student loans
« Reply #10 on: January 08, 2020, 04:06:09 PM »
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. 

MissNancyPryor

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Re: Paying off daughter's student loans
« Reply #11 on: January 08, 2020, 04:09:03 PM »
.....
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.
.....     

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.   

MissNancyPryor

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Re: Paying off daughter's student loans
« Reply #12 on: January 08, 2020, 04:13:58 PM »
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. 

SwordGuy

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Re: Paying off daughter's student loans
« Reply #13 on: January 08, 2020, 05:14:19 PM »
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.   

lhamo

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Re: Paying off daughter's student loans
« Reply #14 on: January 08, 2020, 05:25:26 PM »
I hope that my kids will not take out loans for school, but if they ever do and my financial situation allows for it I will probably help them accelerate repayment by doing something like matching their payments or (if they are paying huge amounts) paying an extra 30-50% on top of their payments.  Seems to be a good way to incentivize them having skin in the game and discipline to get it knocked out quickly.  If I had extra on top of that I would probably give them money to put in a Roth IRA (moves money from my taxable pot to their tax-free pot with no RMDs for them).

ender

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Re: Paying off daughter's student loans
« Reply #15 on: January 08, 2020, 07:22:13 PM »
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.

SwordGuy

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Re: Paying off daughter's student loans
« Reply #16 on: January 08, 2020, 08:57:51 PM »
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.


ender

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Re: Paying off daughter's student loans
« Reply #17 on: January 08, 2020, 09:02:47 PM »
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)?

MissNancyPryor

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Re: Paying off daughter's student loans
« Reply #18 on: January 08, 2020, 09:29:14 PM »
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.     

mm1970

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Re: Paying off daughter's student loans
« Reply #19 on: January 09, 2020, 11:13:06 AM »
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..

Paul der Krake

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Re: Paying off daughter's student loans
« Reply #20 on: January 09, 2020, 12:32:30 PM »
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.

MissNancyPryor

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Re: Paying off daughter's student loans
« Reply #21 on: January 09, 2020, 01:30:35 PM »
@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.   

Paul der Krake

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Re: Paying off daughter's student loans
« Reply #22 on: January 09, 2020, 01:52:56 PM »
@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

MissNancyPryor

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Re: Paying off daughter's student loans
« Reply #23 on: January 09, 2020, 05:16:06 PM »
Cool!  Thanks-

Car Jack

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Re: Paying off daughter's student loans
« Reply #24 on: January 10, 2020, 07:18:40 AM »
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.


MissNancyPryor

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Re: Paying off daughter's student loans
« Reply #25 on: January 10, 2020, 09:08:05 AM »
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.   

MissNancyPryor

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Re: Paying off daughter's student loans
« Reply #26 on: January 10, 2020, 09:18:24 AM »
 
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. 

Laura33

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Re: Paying off daughter's student loans
« Reply #27 on: January 10, 2020, 10:10:15 AM »
[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.

trollwithamustache

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Re: Paying off daughter's student loans
« Reply #28 on: January 10, 2020, 10:23:44 AM »
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.

Dicey

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Re: Paying off daughter's student loans
« Reply #29 on: January 10, 2020, 10:25:18 AM »
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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Re: Paying off daughter's student loans
« Reply #30 on: January 10, 2020, 10:51:51 AM »
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.

MissNancyPryor

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Re: Paying off daughter's student loans
« Reply #31 on: January 10, 2020, 11:07:57 AM »
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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Re: Paying off daughter's student loans
« Reply #32 on: January 10, 2020, 11:19:22 AM »
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. 



MissNancyPryor

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Re: Paying off daughter's student loans
« Reply #33 on: January 10, 2020, 11:31:49 AM »
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.       

lhamo

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Re: Paying off daughter's student loans
« Reply #34 on: January 10, 2020, 11:38:44 AM »
You sound like a great mom.  Your kids are lucky to have you!

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Re: Paying off daughter's student loans
« Reply #35 on: January 10, 2020, 11:42:57 AM »
[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!   

Dicey

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Re: Paying off daughter's student loans
« Reply #36 on: January 10, 2020, 11:45:02 AM »
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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Re: Paying off daughter's student loans
« Reply #37 on: January 10, 2020, 11:45:17 AM »
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)

MissNancyPryor

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Re: Paying off daughter's student loans
« Reply #38 on: January 10, 2020, 11:52:00 AM »
[
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. 

Dicey

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Re: Paying off daughter's student loans
« Reply #39 on: January 10, 2020, 09:34:22 PM »
[
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).

Paul der Krake

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Re: Paying off daughter's student loans
« Reply #40 on: January 10, 2020, 11:02:18 PM »
[
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?

Dicey

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Re: Paying off daughter's student loans
« Reply #41 on: January 11, 2020, 01:19:05 AM »
[
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.

MissNancyPryor

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Re: Paying off daughter's student loans
« Reply #42 on: January 11, 2020, 07:57:38 AM »
@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.     

Dicey

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Re: Paying off daughter's student loans
« Reply #43 on: January 11, 2020, 11:06:08 AM »
@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.

Cassie

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Re: Paying off daughter's student loans
« Reply #44 on: January 13, 2020, 07:40:31 PM »
I think paying for a year once she starts her lower paying job would be a great compromise.

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Re: Paying off daughter's student loans
« Reply #45 on: January 14, 2020, 08:05:18 AM »
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.

Fishindude

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Re: Paying off daughter's student loans
« Reply #46 on: January 14, 2020, 08:23:26 AM »
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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Re: Paying off daughter's student loans
« Reply #47 on: January 14, 2020, 01:56:25 PM »
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!

wellactually

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Re: Paying off daughter's student loans
« Reply #48 on: January 14, 2020, 03:54:13 PM »
@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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Re: Paying off daughter's student loans
« Reply #49 on: January 14, 2020, 04:47:41 PM »
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.