There seems to be a growing trend of parents getting sucked into Parent PLUS Loans to pay for their kids college. On face value this seems like a great thing to do and a way to borrow money to help pay for college you can’t afford.
But as a consumer debt expert I get bombarded with questions from readers who are drowning in these loans.
A Parent PLUS Loan can be a tragic way to send your child to a college you can’t afford. If this debt becomes unmanageable for some reason, you can find your wages garnished, your Social Security checks can be garnished, and you might even find yourself sued by the government. And I already know what you are saying, “that won’t happen to me.” And it won’t, till it does.
Keep in mind that the majority of student loan debt is not owed for students who graduate with a shiny degree. Most don’t. Instead this debt is owed for a benefit never received.
Unless you are certain your child is going to finish their degree and find suitable employment, then these loans may form a noose around your financial neck while they are off working some low paying job.
Typically there are few options to making these payments more affordable. Advice on how to escape this debt seems limited and student loan servicers don’t seem to be offering up much in the way of help and advice, except pay up.
These Parent PLUS Loans can quickly go bad for a number of reasons, all of which are beyond your control. Most of the examples I hear are from parents who lost their job, a spouse died or became disabled, they became ill, or retired with this debt still hanging as an obligation.
If you know where to look, there are some creative ways for parents to deal with the debt. In fact my favorite solution can lower your payment now and have the balance due, forgiven in ten years.
I think there are three major options, but only two which are contenders for making this debt manageable. If you’d like to learn more, click here, to read my detailed guide on what to do.
The bottom line is for parents to exhaust all logical alternatives before taking out a Parent PLUS Loan. This might include the not so popular idea of sending your child to community college or a less expensive school, exhausting grants and scholarship opportunities, and asking your child to help pay for school.
For those that feel they are buried in Parent PLUS Loans, click here and read this guide before you give up hope.
If you have a credit or debt question you’d like to ask, just click here and ask away.
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