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Quick Student Loan Question
Old 05-20-2019, 10:14 AM   #1
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Quick Student Loan Question

Student loans are a mystery to me, but this should be easy.

Dear Nephew graduated last week; he's a good kid--best of the bunch.
He has a student loan of about $30K with a ~$320 a month payment starting in six months; duration 10 years.

Wondering: If DW and I give him say, $10K to lower the balance before the payments start would it lower his payment or just shorten his number of payments due?

Not sure if he has already locked himself into the payment amount; as noted, no idea how this works.

Our other option is to give him the $300 a month for a certain LIMITED period of time until he gets his feet under himself job-wise.

Any insight from the collective welcome.
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Old 05-20-2019, 10:19 AM   #2
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Shorten his payments. I did this for both our kids and it just decreased the balance. Maybe he could restructure them, though? Not sure about that. $320 isn't a terrible payment, but would have been when I was fresh out of college.

What's his interest rate? Just being nosey...
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Old 05-20-2019, 10:22 AM   #3
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You guys are great ...nice thing to do. Now do specifically want the money to go to his loans or do you want to help him get started in the grownup world?

If you want tied directly to the loan do the 300 a month idea. If you want to give him a boost give him the cash. Depends how mature you think he is, it all comes out of his pocket. If your concern is helping him save interest money, ask him directly how it works. Your number indicate around 8400 in interest...over 10 years that's not massive...
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Old 05-20-2019, 10:29 AM   #4
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Quote:
Originally Posted by SumDay View Post
Shorten his payments. I did this for both our kids and it just decreased the balance. Maybe he could restructure them, though? Not sure about that. $320 isn't a terrible payment, but would have been when I was fresh out of college.

What's his interest rate? Just being nosey...
No idea. DW is going to do a deeper dive tomorrow.

Quote:
Originally Posted by ivinsfan View Post
You guys are great ...nice thing to do. Now do specifically want the money to go to his loans or do you want to help him get started in the grownup world?
He's worked hard and is a smart guy. He has no immediate family support (financial or otherwise) and we're just trying to get him off on the right foot; he's out last hope!

We're just throwing ideas around...he needs a car, an apartment and a J.O.B.!!
Our other idea was to get him one of those $99 a month KIAs to drive, but he'd have to apply in his own name was we don't want the liability.
OR pay his first/last/security on an apartment.
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Old 05-20-2019, 10:30 AM   #5
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He's lucky to have you guys.
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Old 05-20-2019, 10:45 AM   #6
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I will offer up an alternative. Help him get on the path of investment/retirement. Instead of giving him the $300/month to pay towards the student loan, offer him a 1:1 match on his first $300/month in a Roth IRA or Roth 401K or even the first $300/month towards a Roth (no match required).

The idea here is that the $300/month you are providing isn't intended to allow him to get the latest cell phone, or fancy car, or vacation trip that he wouldn't be able to do because of student loans, but rather to get him started towards FIRE.
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Old 05-20-2019, 10:50 AM   #7
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Originally Posted by copyright1997reloaded View Post
I will offer up an alternative. Help him get on the path of investment/retirement. Instead of giving him the $300/month to pay towards the student loan, offer him a 1:1 match on his first $300/month in a Roth IRA or Roth 401K or even the first $300/month towards a Roth (no match required).

The idea here is that the $300/month you are providing isn't intended to allow him to get the latest cell phone, or fancy car, or vacation trip that he wouldn't be able to do because of student loans, but rather to get him started towards FIRE.
Oh, we've set him up with an investment account (and seeded it) a few years ago. He's made a whopping $1100 over the past 3 years. we wanted him to learn the benefits of the market.
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Old 05-20-2019, 10:51 AM   #8
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He's lucky to have you guys.
More than he knows!!! But he is appreciative. We've been helping out since he was born so, in for a penny, in for a pound
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Old 05-20-2019, 11:47 AM   #9
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Offer better terms? Maybe 2.5% over 10 years? That would lower the payment to $280.

You'd still have the option of forgiving the loan when it gets to your 10K amount.
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