Federal PLUS Tuition Loans May Lure Parents into Debt

0
22

[ad_1]

“The situation is really spinning out of control for borrowers who face repeated economic or financial ups and downs, especially when they have high-interest loans such as PLUS loans,” said Mr. Looney.

Join Michael Barbaro and The Daily as they celebrate that students and teachers ended the year like no other with a special live event. Meet the students of the Odessa High School featured in the Times documentary series. We’ll even perform loudly with the drumming of the award-winning Odessa Orchestra and a special celebrity welcome speech.

“For a financially secure high-income parent who makes automatic payments,” he added, “the loans are working fine. But if something bad happens, it’s a disaster. “

Parent PLUS loans are also less secure than other student loans. If borrowers cannot afford to pay, they usually only have access to the most expensive income related repayment a plan that requires borrowers to pay 20 percent of their discretionary income over 25 years; everything else is forgiven. Like other student debts, PLUS loans are not automatically repaid as a result of bankruptcy, but require a separate proceeding with stricter legal barriers. The consequences of default are serious: the government can confiscate tax refunds and increase wages and social security.

Although data on default rates for PLUS parent loans are limited, they are much lower than for loans taken by students, but still cause concern, researchers say student loans. To keep debts manageable, parents must borrow no more than they earn in a year – for all children, he said. Mark Kantrowitz, financial aid expert.

“A significant proportion of parents borrow more,” he added.

Misty Whiskarver, 55, of Caldwell, Ohio, sent her four children to college and now has nearly $ 194,000 in PLUS parent loans for three of them. Her youngest graduate graduated from high school in May 2020.

“We were eligible for very little student assistance,” said Ms. Whiskarver. “Children received Pell grants only if two children were enrolled at the same time.”

Despite the heavy workload, she can be one of the most fortunate. As a government employee for over 30 years, Ms. Whiskarver is eligible for the Public Service Loan Forgiveness program, which, given her $ 50,000 salary, lowers her monthly payments to about $ 250 from $ 2,000. After 120 payments over 10 years, all balances on the balance sheet are forgiven. But in order to be eligible for her youngest child’s education payment for the remaining nine years, she needs to continue to work in the relevant position.

[ad_2]

Source link