How to take on my parent's Parent PLUS loan? Is it possible???

Paying for College
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<p>Cpt, I think the problem is that the parents can’t afford to carry the $60K debt they already have, much less $90K. </p>

<p>Also, it’s not clear whether the parents thought they could take the PLUS loan, defer payments, and then their daughter would take over all payments when she graduated:</p>

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<a href=“Parent Student Loans Hub - Articles, FAQ, and Applications | Edvisors”>Parent Student Loans Hub - Articles, FAQ, and Applications | Edvisors;

<p>IMHO, it would be incredibly stupid for parents to take out PLUS loans of $60K at ~8% interest and then defer all payment while their student is in school… but it seems like that is what these parents may have done. So I’m thinking they are telling their daughter that she can’t quit school now precisely because they don’t want to lose that deferment (although I don’t know whether they would be eligible for continued deferment while daughter is enrolled at least half time in the CC program)</p>

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<p>OP, by the way, the debt is your parents, even if something happens to you and you are no longer alive, as far as I understand it. There have been cases where parents have paid off the educational loans of their children who have sadly died. </p>

<p>I am very concerned about the level of debt your parents currently have and how it will be paid off by you OR them, plus whether there is any ability to get MORE debt and pay that off. These issues need to be addressed so you can make clear choices. Things seem pretty muddled to me. I don’t understand how your parents could have gotten a loan if they don’t have assets to repay said loan. Lenders are known to take a % of wages if they have to from borrowers who don’t pay back loans in a timely manner; the courts are asked to help if the parties can’t work things out among themselves. Might be a good idea to talk with financial aid or someone in your life that has a good sense of your financial situation and your parents" financial situation to figure out the best course moving forward.</p>

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<p>Himom, you are mistaken – a parent PLUS loan is discharged by the death of the student, as well as by death or permanent disability of the parent borrowers. Obviously no one wants anyone to perish, however. </p>

<p>I’d note that it is also possible, although very difficult, for the PLUS loan to be discharged in bankruptcy. Not an easy process at all, but it can be done with a showing of undue hardship. Not a good option, but obviously preferable to anything involving fatalities.</p>

<p>Parent PLUS loans don’t have any asset or income test for the parents – all they need to do is demonstrate good credit. A person with a $40,000 income who always pays their bills on time may have excellent credit – and with a PLUS loan the parents are allowed to borrow up to the full COA for the school. </p>

<p>There some ways the parents can work with the lender to stretch out their payments – I provided a link to the site that explains the options above. So there are ways that the burden on the parents can be reduced somewhat.</p>

<p>I do feel that janefield is between a rock and hard place. I understand why her parents want her to complete the degree, but I also feel that if indeed they cannot pay back the loans they have already taken, it would be unconscionable for the daughter to allow them to take on more debt under these circumstances-- and that might be true even if she wanted to continue the program. I can understand that at age 17 she probably did not understand all the ramifications of what her parents were doing by taking on so much debt themselves – but now that she is old enough to see what is happening, then I can see why she would be reluctant to continue, and that in itself may be coloring her perspective about the value of her degree. That’s why I suggested meeting with a financial counselor – someone who can look over the parents finances and loans, and help them come to terms with their current situation and avoid digging themselves in any deeper. </p>

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<p>OK, I stand corrected. I guess it was all the private loans that the parents were being required to repay, even though their kid had sadly died. Still, I know that all of us much prefer our beloved kids alive and WITH us to being dead and gone. The parents I know have a VERY hard time coping with the death (or even serious illness) of any of their kids–we want our kids to live full, long and productive lives. Our kids are all priceless and in time, kids CAN try to help repay parents, if kids are in a position to do so (and if it is desired by kids and parents. Repayment can come in many forms, including helping our parents when they need us, contributing financially when we are able, etc.</p>

<p>I agree that a good, qualified financial counselor would be a good idea, to give the parents AND student a better idea of their current options and how to meet their current and future obligations. Definitely, I would be reluctant to advise anyone for getting any deeper. </p>

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<p>The think, Janefield, you are right. If it makes you feel better, you are being the financial guru here. You don’t look at what’s gone, what you blew that was in the pot, and continue to spend more when you’ve already spent more than you can afford. You;ve looked at the loans that your parents have taken out, and say that you don’t want them in anymore debt. But it’s THEIR debt, not yours. You did not cosign those loans. At this time, it’s one of the financial decisions THEY have made. And it’s not just the money they “invested” in this, but a lot of their pride, hope, dreams. They’ve reconciled in their minds that the money is well borrowed, invested and it’s what they want.</p>

<p>What is truly the right thing to do here? That’s a tough one. With 3 years of college a done thing, it’s nearly impossible to transfer anywhere and get any degree in less than 2 years, which means paying for another 2 years somewhere. If there is a state school near your parent’s home where you can go on the cheap, and get some degree, any degree, in that time period at rock bottom prices, with you working part time, the tuition train would come to a screeching stop right now. Parents would owe only what they do up to this point and maybe can start paying on the loan, and you take over payments at this state school, go year round and get that degree. Take a deep breath, live and home and start paying your loans and helping them pay theirs that one year, working as many hours as you can, and making some sort of directional decision on the next step. Finding PT assistantship work so that maybe, maybe you can get some tuition reimbursement or help for a PT Aide certification as you do the job. But you’ll do this with a degree. Or maybe even start such a job while working on that degree at the local college. This is a change in direction, yes, but not a total step back into CC. You do understand what a slap in the face it is to go from your third year in college with all that money invested, to ground zero into a community college health aide program? </p>

<p>But, your parents have to be considered in all of this too, because right now you need their support regardless of what you decide to do, and they may not be willing to give it in that form that i am suggesting, much less the CC route you are proposing. I know I’d balk and be plenty upset if any of kids came up with that idea their 4th year-dropping out and starting afresh at a cc in a whole other program. </p>

<p>Ironically, I have a close friend who did let her son do pretty much what you are proposing, only the program he wanted in animation, and it’s a private school priced program within the confines of the state university. He was about a year and a half from getting his degree, came home, wanted this program which meant another 4 years as it took virtually none of the credits he had taken and required a whole slew of classes he had never taken from Beginning drawing on up. It meant basically 4 more years at private school prices after the parents had already paid for about 4 years (he had transferred and shifted gears one already–bombed out of an engineering program that was absolutely NOT For him. They are doing it. He’ll have completed the third year of this program this spring and the 2014-15 year will be his last, as he is on track. He’s also now in his mid 20s. The parents are not happy about any of this, and I have no idea how much money has been spent, a lot, I know on his college. But the parents were WILLING to financially support these moves,that he could NOT have paid for himself. </p>

<p>So though yours is the financial voice of reason here, your solution to start all over again from being a rising senior at a university to a beginning freshman at a CC in order to save parents money, is not going to go over well anywhere. There is enough in the ante, that everyone gritting their teeth now and getting to the finish line becomes the better choice unless a halfway choice to no one’s likeing can be found and agreed upon. The timing on this is incredibly bad as there is no easy way to go anywhere after having 3 years of college under the belt at a particular school.</p>

<p>Hang in there. Good luck.</p>

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<p>You need to have a chat with your parents about the money. If you take a Gap Year now, can they begin to pay down the $60k that they owe, or not? Getting a paid internship in your current (or a related) field to truly try it on for size for a year might help everyone understand that it will be better to cut your losses. </p>

<p>If they tell you that they can’t afford to pay towards what they now owe if you are in a Gap Year, or if they just plain don’t want to hear about that option, go to the library and pick up some model loan agreements, and draw one up with your parents. Agree to pay off their $60k. No bank or credit union will loan you this money. It will have to be a private agreement between you and them.</p>

<p>I should have dropped out or taken a Gap Year after my third year of college. I had not-so-good grades, was in a degree program that wasn’t a good match, well basically everything that you have written here. I stayed because the Gap Year I needed would have messed up my financial aid package. I powered through. My debt-load was all mine so at least I didn’t have to feel bad about what my parents owed. My degree program was all but useless other than being able to say I had a bachelor’s degree from College X. Two years out of college after a string of minimum wage jobs, I changed fields entirely, went back to my cheap state U, took a year and a half of courses in the new field, and headed off to grad school in that field. So I do know that changing fields can be done. I just should have done it a lot sooner when the financial consequences would have not been as serious.</p>

<p>Wishing you and your parents all the best.</p>

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<p>"""
Some things are very important to some people, and you can’t change that. They’d rather be $90K in debt and have their kid with that diploma.
“”""</p>

<p>That may be so, but it doesn’t sound like this will really be the parents debt. It sounds like this is essentially the student’s debt (even thought it’s Plus)…and the parents are demanding more debt. They don’t have the right to make such demands if they’re expecting the child to pay it all back.</p>

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<p>"“If you’re a parent PLUS borrower, you can defer repayment of Direct PLUS Loans first disbursed on or after July 1, 2008, while the student for whom you obtained the loan is enrolled at least half time, and for an additional 6 months after the student graduates or drops below half-time enrollment (half-time enrollment status is determined by your child’s school). You must separately request each deferment period.”"</p>

<p>The above needs to stop. It just encourages parents who cant afford to pay back the loans to take them out thinking the child will pay them back. If parents had to make interest payments (or more) while the student was in school, it would stop a lot of this nonsense.</p>

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<p>Animation is such an unstable career at the moment too and, with such debt racking up, I feel so uncomfortable with the idea of finishing the major. I completely underestimated the field. The idea of spending tens of thousands of dollars to hopefully maybe get a job is pretty discouraging. My parent’s do expect me to pay off everything which is why they may have taken on so much debt. They may have not seen it as their problem at the time but I know that feeling definitely changed when they received that first bill. I don’t know if they are paying the interest right now or if the loans have been completely deferred which worries me quite a bit.</p>

<p>I am afraid that soon after graduating, I would have to resort to working minimum wage jobs and, from the looks of it, my loans would be more than 1k a month. From what I’ve read of the career, working as a PTA pays about a minimum of 30k and, over time averages to about 50k in my home-county, which is a lot better than worse-case scenario financially. I’m afraid of being stuck trying to pay off my loans with a slew of minimum wage jobs. This is not what I wanted for my family or myself. </p>

<p>I’d certainly would have to live small and contribute almost all of my income to pay off those loans no matter if I comply with my parent’s wishes or if I transfer to the stateU or a PTA program. I really don’t understand how interest builds over time though. Does it add to your loans each year or just to the overall amount after graduation?</p>

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<p>If you have any subsidized federal loans, those loans do not accumulate interest while you are studying. Everything else accumulates interest beginning as soon as you take them out. The interest on both Parent Plus and unsubsidized federal loans can be paid while you are in school if you feel like it, or can be left unpaid, and thus increase the amount owed.</p>

<p>Your financial situation is, quite frankly, a very ugly one. Go have a meeting with the Financial Aid officer at your current college/university, and sort out what all of this means so that you do understand it. Then get your parents into a meeting with someone who can help them understand the ramifications. Right now it looks like some $90k is owed (parent loans + your student loans). The three of you need to develop a plan for paying that down.</p>

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<p>YOUR PARENTS took out the PLUS loans and it is the parent who sign the notes who is responsible for repaying them. You do need to let your parents know that the field of study you chose does not make much money so you won’t likely get a job paying much. Ask them if they can pay back the loans. If they say they are expecting you to do so, again, let them know that the chances are just about zilch that you will be making enough to do so. That the parent who signed the notes is the one responsible and you may not be able to assist them as you have your loans to repay too and the industry does not may much. Tell them that is why you are looking at other fields. </p>

<p>Is there no state university near home, where you can commute and finish your degree in ANYTHING without incurring more PLUS? That is the ideal situation. Two years at State U is not that much different from another year and a half at Expensive U and if you can go summers, work, you might be able to bring the time down even more at that state u. The problem with the community college idea is that you are going way backwards from getting that bachelor’s. What you are thinking of doing does make sense monetarily, but it means losing every thing “invested” in terms of getting a degree. Students change their minds about course of study all of the time, but when finances are involved, one often does not have the luxury to add extra time and money to the course of study. It becomes an issue of getting that danged degree and getting out. What’s complicating this is that you are at a school neither you or your parents can afford and getting deeper in debt each term you study there. The best choice is to transfer to a cheaper 4 year state commuter school and just get that degree as soon as possible.</p>

<p>Calmom, I don’t think the issue is that the parents want a delay on the PLUS repayment. They would get that if the OP embarked upon a fulltime Community college program. And, no they do not have to be repaying that loan. Not for 6 months after grad. Actually the loans will become due sooner if the OP stays at the current school as she is on course to graduate in a year and a half, and with residency requirements, it would be likely that any transfer is going to result in more time before a Bachelor’s degree is obtained. </p>

<p>OP, if your parents are not paying on that loan, it’s increasing by about 7% each year. It accrues interest from the day funds are disbursed.</p>

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<p>You need to find out. So you are going to have to sit down with them and have a very specific discussion about what has been borrowed so far, and what the current outstanding debt is. If your parents have been deferring all payments then you all may be in for a rude awakening. </p>

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For the PLUS loans, if it not being paid when due, then it is added to the loan balance, and interest is charged on interest.</p>

<p>So, to keep the math easy, let’s say that a person borrows $10,000 at 10% annual interest, accruing monthly. That’s $1000 per year interest - or $83.33 a month. A person could make interest-only payments of that amount, and at the end of the year they would have paid out $1000 and still owe $10,000. </p>

<p>If the person makes no payments at all, then the unpaid interest is added to the balance (capitalized), and interest is charged on that. A Parent PLUS loan will be “capitalized” on a quarterly basis. </p>

<p>So each month without a payment the unpaid interest is being added to the balance, and the amount of interest charged is slowly creeping up as the balance goes up.</p>

<p>There are some online calculators you can use here:
<a href=“http://www.finaid.org/calculators/interestcap.phtml”>http://www.finaid.org/calculators/interestcap.phtml&lt;/a&gt;
<a href=“http://www.asa.org/repay/calculators/defer/”>http://www.asa.org/repay/calculators/defer/&lt;/a&gt;&lt;/p&gt;

<p>The interest rate on PLUS loans has changed over the years, but as an example – if your parents borrowed $20,000 for the first year of college at 7.9%, then after 12 months of no payment, the outstanding balance on that $20K would be $21,627. </p>

<p>Your parents should be able to get an exact statement of the total amounts now outstanding from the loan servicing account – so there is no need to do all the math – but the point is that you may find that they owe considerably more than $60K at this point. </p>

<p>But you really don’t know without talking to them. </p>

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<p>The parents didnt do their due diligence when they signed those loans because they assumed their child could pa them. Another reason why parents income needs to be considered when being approved for these large loans.</p>

<p>I dont know how much the parents are earning, but it is probably equal or greater than what the student would be earning just out of college. So, if they know that they cant afford these payments why did they think their child could???</p>

<p>I know this sounds awful, but the parents (the real adults) need to get stuck with some of these loans for not doing their job. the student might suggest that they split the loans. </p>

<p>Seriously, theres no way this student is going to earn enough to pay these loans back unless she can live at home for free for a very long time.</p>

<p>There was thread a couple of years ago people (who were paying back large student loans) made posts concerning at what point they were sick and tired of making big loan payments. Even some who were paying back modest student loans chimed in. It seemed that there was a consensus that by the end of the second year, the posters were regretting their loans and were tired of seeing such a chunk of their earnings going for payments.</p>

<p>That is what I fear for this student. Can you imagine going to work at some modest paying job, and then seeing nearly all your earnings going for student loans? You’d stop wanting to work.</p>

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<p>It is true that this is a mess that the parents created for themselves – but unfortunately now that the daughter is mature enough to understand these issues, she is going to have to step up and assert some control at this point.</p>

<p>Whether she opts to stick with the 4 year degree or not, she’s going to have to sit down with her parents, make it clear that there is no way to transfer the debt and she cannot make any promises about payment – and ask the hard question: are the parents willing to take on additional debt, knowing that it will be their responsibility to make payments. </p>

<p>Whatever happens, the parents can NOT take on added debt for their daughter to complete her BFA with the expectation that daughter will be making the loan payments for them, at any time in the near-term foreseeable future. So the parents need to understand fully that the PLUS loan is THEIR responsibility – and if they can’t handle that reality, then it may be that the daughter will have to discontinue her education in any case.</p>

<p>My son was able to complete his 4 year degree transferring to to a state college for his final 2 years – he was able to pay his own way and actually came out of school with no debt. There was a gap period of 3 years between the first two years of college and the final two --so he was about age 25 when he graduated. I had a PLUS loan from his first year of college but it was a far more manageable amount – and of course I could easily afford the payments. </p>

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<p>OP, this is a very difficult situation for you. If your parents took out $60K in PLUS (parent loans), they are accruing about $4K in interest this year and more each year if they are not paying at least some of it. Do sit down and explain to them that you are now older and wiser, have learned much more about the field you started and that it isn’t going to pay anywhere enough for you to be able to pay even the interest on the loans they have taken out. Ask them if they have been paying on the loans. Tell them right out that this is a huge problem and that you are hearing and seeing others getting brought down by these loans and that you and they are over their heads already. If they insist THEY can handle these loans and more, there really isn’t much you can do. If they say YOU must pay them, say that the numbers just aren’t coming out that way. </p>

<p>I understand why the community college program looks attractive, but really, if there is any way you can get any degree as quickly as possible at the lowest possible cost, and then look for some masters program , you’d be better off. I may have mentioned my son’s girlfriend who graduated with a psych major. She worked as a PT aide with no training other than what the rehab center that hired her gave her, and she then took summer cc courses to get those undergrad courses needed to enter a master’s program in OT. This way she was always moving forward. But she likely could have also gotten PT Aide certification or other medical aide certification at a community college on top of her bachelor’s degree. There are possibilities to deduct costs of such courses tax wise and sometimes places will even reimburse for them. It’s just better to get that degree done and over with, but as cheaply as possible. That is a compromise between what your parents want: degree from college where you are in current major, and what you want: quit current program, start from scratch again at Comm college. You can see why it’ may be unbearable for your parents to see you start over, though, yes, I can see the sense in it. Frankly, it’d pain me greatly if you were my kid. </p>

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<p>CPTE…in many states now, one must be certified as a PT assistant or OT assistant. This usually involves a two year course of study. It can no longer be done as “on the job training”. So I see where the OP is coming from on this.</p>

<p>HOWEVER, her parents have made it clear that she must assume the loans if she leaves the current school.</p>

<p>If these are Plus loans, wouldn’t they still be deferred as long as the OP is IN a college degree seeking program? The PT assistant programs in this state ARE degrees from a CC. </p>

<p>If that were the case, the OP would not have to assume payments until she is done with the CC degree. She would need to check this for accuracy!</p>

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<p>I know. My state and yours does, I believe, but there are many niche postitions within a lot of nursing homes that put one in the zone without doing the jobs that are exclusive to those certified. My son’s SO did this for a while. No certifications at all, but she got plenty of experience and the rehab center did reimburse her for those courses taken towards any further education in that direction. She was a psych major in college and had to take specific science courses to be eligible to even be considered for a master’s program. She’s in one now–in your state, actually for OT, full time. She was with a very well regarded rehab center for a number of years. and paid reasonably well even with no certification other than a CSN that they all had to get to work with the patients there, many who were terribly disabled. </p>

<p>Yes, the PLUS will be deferred as long as OP in in a college progam full time. The problem is that the interest on these loans are juggernauts and keep chugging along getting bigger all of the time Doesn’t take long to double what’s owed if nothing is being paid. </p>

<p>Her parents can make things as clear as they want. No money, loans can’t be paid. On $60K, we are talking over $4K in interest alone each year. And OP has her own loans that SHE MUST repay as they will come after her if she is earning any money and not paying on them. Those are legally HER responsibilty, not her parent’s. The PLUS are legally her parents’ and not hers. </p>

<p>I have a close friend who is in so much trouble with loans. She and her DD took out what has now accumulated to $200K+ in face amounts. She can’t pay, neither can her DD. Neither make enough to pay even the interest and never did The government has finally basically extracted some nominal amount that isn’t even close to the interest and they are shut down for a lot of things as a result of all of this, but unless they strike it rich somewhere, they will die without having made a dent on those loans which get bigger every day. They get reviews that try to squeeze something out of their income, but you can’t squeeze anything out of stone. There are income guidelines on all of this that do allow people to keep certain base amounts and if you earn less than that, you don’t have to repay. You get monitored and have to pay when you go over. Miserable terrible way to live and it’s all on your credit history, but that is what they signed up for.</p>

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<p>I found out quite a bit from my financial adviser today. My parents have been paying interest on the loans when they are able to. At this point in my education, they have 64k in their name while I have 20k. We’d have to take out at least 27k more in loans together to finish this BFA.</p>

<p>As for the job shadow, it turned out really well. I asked a ton of questions there and I have a much more concrete idea of the field itself. From what I learned from the shadow, that career would be a much, much better fit for me. Along with the PTA program, my local community college has a 2 year transfer program for the stateU’s PT BA and PhD degree which I’m looking into.</p>

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<p>Talk to your parents and tell them what they owe and you owe and that it is highly unlikely that you will be able to pay for their $64K. That your $20K is going to be difficult as it is. That jobs and pay are a huge issue. That you cannot see taking another $27K in loans between you and them, which is what it will cost. Ask them if they can pay what they’ve taken already, and how much more if any? That the money is a huge problem here. </p>

<p>But still, you need to go to work and find a way to do the PT program part time, at least the earlyparts of it. Yes, in our area a PHD is pretty much needed to be a full PT person which is why my son’s SO chose OT which only requires a masters. She just could not swing the money and time for the PT certification. The OT is taking a huge bite out of her finances as it is. </p>

<p>You are not on a level playing field in making these decisions with the $84K loans already on your head, to think of just starting at ground zero, you do understand? But you need to talk to your parents about this. This scares me that you want to make this commitment that requires a restart in that, yes, you could change your mind again. I really think getting any degree from a state school that requires far less in loans and then finding a job and letting yourself look in the working world is a better way to go. </p>

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<p>I’m feeling much more confident though saying that, in my case, a 110k animation degree isn’t the answer either. Now that I’ve been looking more into it, going for a DPT/OT may also be out of my reach. I’ve been dedicating the past 3 years to the arts as well as most of my high school experience. I’m short on time and money. At the job shadow though, what I enjoyed most out of the experience were the interactions with the patients and the progress that those patients were making through physical therapy. If I wanted to commit to that field, being a PTA would be my best bet.</p>

<p>Thank you all so much for all of your input and insight. I only had a vague idea of what kind of debt my family and I were shouldering when originally posting. Most of what needs to be figured out at this point will have to be between my parents and I from here on out. We certainly have quite a bit on our plates but I’ve certainly come out of this post with a much better understanding of our predicament. Again, thank you. :)</p>