Should I take student loans out or accept my parents offer to loan me money for tuition?

[MaxingRelaxing]

Hey everyone. Im an incoming M1

I was planning on taking student loans out but my parents graciously offered to loan me money for tuition interest free for medical school. I have enough saved up for living expenses. Should I accept my parents offer?

I was also curious if by accepting my parents offer to loan me money, will I have a smaller chance at receiving scholarships and grants?

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[AnMDtoB]

Hey everyone. Im an incoming M1

I was planning on taking student loans out but my parents graciously offered to loan me money for tuition interest free for medical school. I have enough saved up for living expenses. Should I accept my parents offer?

I was also curious if by accepting my parents offer to loan me money, will I have a smaller chance at receiving scholarships and grants?

Not sure why you would consider refusing based on this post? Interest on such a large amount of money means that you will be saving mega $$$. Technically I believe since you are old enough (probably) then you don't have to report their income on scholarship/grant requests so it probably won't affect you there

 

[Lucca]

Obviously you take the 0% interest loan.

 

[MaxingRelaxing]

Not sure why you would consider refusing based on this post? Interest on such a large amount of money means that you will be saving mega $$$. Technically I believe since you are old enough (probably) then you don't have to report their income on scholarship/grant requests so it probably won't affect you there

ok that was my main concern. I was just wondering if taking loans out would be cheaper in the long run because of the potential for scholarships and grants

 

[SterlingMaloryArcher]

It depends if your parents are controlling and divisive.

 

[TheIllusionist]

parents always

 

[AnMDtoB]

ok that was my main concern. I was just wondering if taking loans out would be cheaper in the long run because of the potential for scholarships and grants

That would be very unlikely - loan interest ends up being a truly insane amount of money. You would need a *really* good reason to avoid paying that extra tens of thousands of dollars

 

[Dro133]

It depends if your parents are controlling and divisive.

This. Do you have a good relationship with your parents, OP?

 

[MaxingRelaxing]

This. Do you have a good relationship with your parents, OP?

It depends if your parents are controlling and divisive.

Yes I do have a good relationship with them. Initially I said no because I didnt want to put that burden on them but after further discussing it with them and calculating the amount of interest I would have to pay it seems like it would be the more logical decision (if it wouldnt preclude me from receiving a significant amount of money from scholarships and grants)

 

[Medic741]

You gotta be VERY aware of the strings that are attached to this money. Nothing in this world is free, even from family. If you're considering this kind of $$ gift from them I'd have a very open/frank conversation about "I want to understand what your expectations are of me if I accept this gift." The answer is never "nothing" and if that's all you get I'd keep digging until you get to the motive & take some time to consider if your values/goals align with your parents. You're an adult by now (hopefully) and your value system will almost certainly be different from theirs in at least some way.

 

[7331poas]

Second what others are saying, you have to be very clear about any strings attached to this money. e.g when do they expect you to pay it back, they have zero say in what specialty you decide on, etc.

 

[ChicagoBear]

Unless you have toxic parents - borrow from them.

However, your parents need to be aware of the other family member who would be interested in a 0% loan - Uncle Sam! The IRS has a minimum interest rate (called the Applicable Federal Rate) that must be charged, otherwise your parents will be taxed on the imputed income they should have earned on the transaction. Right now the IRS minimum is 2.76% - but changes monthly.

 

[deleted480308]

If your parents can’t afford to gift it, don’t take it. Dropping out could devastate them

 

[ciestar]

ok that was my main concern. I was just wondering if taking loans out would be cheaper in the long run because of the potential for scholarships and grants

Many, many schools require you to report your parents’ income in order to be considered for need-based aid. Merit aid is all your doing, but school dependent on how they award it.

 

[DokterMom]

Fill out the FAFSA anyway so you can toss your hat into the scholarship ring. Also, in the event something bad happens to your parents financially or it turns out there are intolerable strings, you'll want to have loans pre-approved, even if you never have to use them.

Pay your parents back what you can, when you can, plus a bit extra if you can.

 

[Premed2295]

Unless you have the type of parents who will ruin your life until you pay them back and have this hanging over your head, parents.

 

[ortnakas]

ok that was my main concern. I was just wondering if taking loans out would be cheaper in the long run because of the potential for scholarships and grants

Unlike undergrad, scholarships and grants are not really a big factor in paying for medical school.
If you’re a citizen, you should be eligible to borrow the full cost of attendance no matter how much you or your parents can put towards it.
(nothing against non-citizens I just don’t know how paying for school works in their scenarios)

 

[sella.turcica]

Never ever do business with family.

 

[Tiran145]

Jeez what kind of parents do you guys have?

It’s not about what type of parent you have but that borrowing from family is a universally bad idea as it causes major stress on family relationships. It you think your the exception to the rule and you have a good relationship with the parents so it won’t happen to you you are fooling yourself. Gifts are one thing but borrowing is a no no

 

[AnMDtoB]

Jeez what kind of parents do you guys have?

Some family members want to offer money they don't really have to help you, so borrowing can put a strain on them and your relationship with them, other times, they may actually have outright manipulative intentions

That being said, some parents are just wealthy and want to help their kid to succeed without any kind of ulterior motive

 

[mrbreakfast]

Jeez what kind of parents do you guys have?

Love (even familial love) makes people do stupid things. You don't know your parents' financial situation. They could be cashing out their retirement for this loan. Also, it creates room for potential stressors. Your family may expect you to live very frugally on the money. They may expect it paid back relatively quickly. They may influence your specialty choice in this regard. They may end up needing this money (illness, etc) back and put everyone in a bad situation. Etc.

OP, if you're going to do this, set the amount, interest rate (if any), repayment timeline, other expectations, etc, clearly in writing beforehand. Personally, I would only do this if I was certain my parents could afford it.

 

[Medic741]

Love (even familial love) makes people do stupid things. You don't know your parents' financial situation. They could be cashing out their retirement for this loan. Also, it creates room for potential stressors. Your family may expect you to live very frugally on the money. They may expect it paid back relatively quickly. They may influence your specialty choice in this regard. They may end up needing this money (illness, etc) back and put everyone in a bad situation. Etc.

OP, if you're going to do this, set the amount, interest rate (if any), repayment timeline, other expectations, etc, clearly in writing beforehand. Personally, I would only do this if I was certain my parents could afford it.

THIS.

Any transaction should have a contract. A loan of this magnitude should involve a lawyer to cover the interests of both parties. If your parents are serious about this you may want to seriously consider paying for an hour or two of a trusted attorney's time to get help drawing up a contract between you two so that there is no confusion // I thought you'd pay me back right away etc.

Going this route you'll lose an enormous amount of financial flexibility for the price of respecting feelings/expectations of loved ones. With some perspective in family affairs I wouldn't touch this with a 10 foot pole without a lawyer's involvement and a clear contract stating expectations and terms.

Not joking. If you're making >$200k decisions lightly and in good faith in you're 20's you're doing it wrong.

Something else to consider, if you become catastrophically injured/killed/disabled in medical school your federal loans would be discharged. Take out $$$ from your parents and your family is completely ****ed. You lose out on certain (very real) protections by not taking out loans from the fed.

 

[907914]

Not joking. If you're making >$200k decisions lightly and in good faith in you're 20's you're doing it wrong.

I bought a house when I was 19 because YOLO and I wanted to be able to have a garden.

Ended up a landlord at 20 years old. @Medic741's advice checks out.

 

[Laradd]

you'd be stupid not to take the 0% loan