Question:
Dear Steve,
I have 4 kids, 2 graduated from college, 2 in college. Parent plus loans for 2 older kids are due and more loans on the younger 2. The monthly loan repayment is more than we can afford. We both work in the public school system.
What can we do to reduce the amount we repay each month? Should we try and do the consolidation loan and forgiveness program? How do we do that if we have Navient, Sallie Mae, and FedLoan loans? Our monthly payment is $1500.
Renee
Answer:
Dear Renee,
Let me get this straight. So you took out a load of Parent Plus loans you can’t afford? I imagine that you did this because you felt you had to send your kids through college. Well I hope they all graduate and get the benefit of this massive amount of debt you are now saddled with.
Your only option to get these Parent Plus loans under control is going to be to consolidate them in a new Direct Loan and then opt for the Income Contingent Repayment (ICR) plan.
Under the ICR your payment would be 20 percent of your discretionary income. Discretionary income is defined as “For Income-Contingent Repayment, discretionary income is the difference between your income and 100 percent of the poverty guideline for your family size and state of residence. The poverty guidelines are maintained by the U.S. Department of Health and Human Services and are available at www.aspe.hhs.gov/poverty.”
Your payments moving forward under the ICR would be eligible for forgiveness after 120 on-time and conforming monthly payments under the Public Service Loan Forgiveness (PSLF) program.
Your employment in public school system may qualify under the PSLF program. You’d need to make sure it qualifies and if you do go this route I would urge you to complete the Employment Certification for Public Service Loan Forgiveness form once you get on the ICR.
Moving forward, please do me a favor and stop taking out loans you can’t afford. What these loans are effectively doing to robbing you of your ability to properly save for a safe retirement.
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