So I’m considering getting a parent plus loan however I also have my own student loans that I’m currently paying and they’re huge. I’m wondering what are consequences of a parent plus loan and student loans in general in case I get to retirement age and still have not been able to pay off the loans.
I think the Parent Plus Loan will be taken out of your social security check if you’re not making the payments.
Doesn’t your kiddo have affordable options?
I would not do that – find your kid an affordable school. You will seriously regret at retirement time.
so you mean if i retire, they will take my social security check and garnish it or will i still be able to pay monthly from my retirement check? And dies that only apply to parent plus loans. Does it also apply to my student loans that i took for my own college payments . And my student has no affordable options, either I help or she doesn’t continue attending.
You will still be able to pay from your retirement check. If you fall behind on your payments that can garnish your social security
As long as you are current, you can keep paying as you have been. Your direct student loans cannot be consolidated with your Plus loans. They will always be two separate obligations.
If either goes into default, yes, they can garnish your SS payments. They do not forgive the loans based on your age.
If you tell us your situation maybe we can help. How long has she been in college? Why is paying suddenly a problem? Some colleges will take a change in circumstances into account.
There is no change in the family finances but she was attending a private school that had given her a ton of scholarships and the option was very affordable. Though the school was very expensive, she was paying very little due to the school financial aid and scholarships. The school was too far and she transferred back to the state school. I could have forced her to stay there but the school was very far and i did not want the risk insisting that she stays there. The state school did not award her any money and so she owes about 25000. with her loan of 5500, the balance of 20000 has to be paid somehow hence the patent plus loan. She will be a junior. And she has a sister who is just starting so i cant afford all that.
Can she take a leave of absence from the private school? Maybe if she works for a year to raise the $20k she needs for her junior year it won’t seem so bad.
There aren’t any schools within commuting distance? What’s her major?
“i cant afford all that” - nor should you feel you have to. What were you contributing toward the other school? / What can you afford?
If she is a junior why isn’t she taking $7,500 in student loans? ($5,500 is the loan limit for freshman - did some of her credits not transfer?) Does she have a course schedule plan that will allow her to graduate in two years?
There are loan fees (more than 4%, so you’ll need to borrow $20,887 to net $20,000) and the interest rate is high (more than 7%), so it will be much more than $20,000 you’ll need to pay back. It is noble that you want to contribute, but you need to know where the money to pay back the loan (and another $21,000 next year?) will come from.
Are you current on your student loans? You may end up getting turned down for PLUS if you are not. Then your DD will be permitted to borrow an additional $5 k (?) or so from Direct loans if you are denied.
You and your daughter really can’t afford this school. I think you should sit down and have a talk about this. How you owe from your student days and have the other one coming up to college years. She probably will have to find a directional state school to which she can commute or go to school part time, pay as she goes. School loans have put enough of s toll onto you.
She can take a leave of absence but I doubt she would ever go back there. I will think of the commuter option but it will be a last resort.
Guava, I know that borrowing more sounds like the right solution, but please- take a step back. This isn’t about whether your D will go back, her personal preferences, last resort commuter, etc. You cannot afford a nickel more in debt right now, and thus, your D needs to figure out how to complete a BA without loading more debt onto you. Taking out the federal limits for herself- which will likely mean a doable repayment if she is thrifty and careful and gets a job quickly after she graduates- is the way to go. Anything over that limit- no. You can’t afford it, and she won’t be able to afford it. You guys are crippling yourselves for the long haul here.
If you have not had a transparent conversation with her about money, do it today. You are already at the max with very little breathing room-- do you guys really want to be the family you read about in the newspaper who are one broken muffler away from being homeless? I’m assuming that if you’ve had any spare cash over the last decade you’d have paid down your own loans… if you haven’t had spare cash up until now, where is the money coming from for more loans?
What was wrong with the original affordable school besides the distance?
To answer your question, yes, repayment of student loans can be from garnishment of social security checks. Even being a co-signer on those loans can get your government check garnished. That’s why so many people who are not able to get any other loans are able to get student loans. The lenders know they have a good chance of getting the money back. I know an elderly man who co-signed his granddaughter ‘s loan and repayment is coming out of his social security check. She’s not able to find steady work so they went after him.
Really, you have enough on your financial plate.
Why would the commuter option be a last resort? Plenty of kids commute. What state are you in? Most state schools are very good.
What parent plus loans or student Direct Loans require a co-signer
The Direct loan is in the student name only and the parent plus is in the parent name.
This OP is already in her own debt. There is no good reason for her to assume more debt…especially since she thinks there is a chance she won’t be able to repay
Was she homesick? You mention the school was too far away (from what?). Would it be cheaper to go to the distant school but come home for more visits?!
@guava123 - One of my dear college friends was miserable far from her home, and undecided about her major, and like your daughter decided to leave at the end of sophomore year even though she had a very good scholarship situation. She went home, worked for two years, thought carefully about what she wanted to major in, and then transferred to an affordable state U near her home. That kind of plan might work well for your daughter. She should not feel that she has to be back in college this fall, especially since the family budget can’t handle the place she’s currently thinking about. A semester or a year or more off to re-think the far away college and to track down affordable transfer options would make good sense.
Student Direct Loan amounts can be increased by about $5k if the parent applies for PLUS and is declined.
The student and parent can also apply for loans where the parent co-signs and both of them are in the hook if more money is needed and the parent does not qualify for PLUS.
The only co-signing of PLUS loans is if parent does not qualify, and has to find a credit worthy guarantor to get that loan—not the student.
There are a lot of ways to borrow money for college. It’s paying it back that’s difficult and painful for a long time. And yes, those loans all allow garnishment to get repaid and that includes the co-signers
I think if you have any late payments you won’t be approved for a PLUS loan. What would you do if you added $25k to you/your daughter’s debt for jr year but don’t qualify when she’s a senior? She’ll be ~$50k in debt with no degree and nowhere to borrow money to finish.