We Listened to Everyone Else and Our Parent Plus Loan Balance Has Now Doubled


Dear Steve,

Parent Plus Loans. The college my son attended encouraged Parent Plus Loans. They led us to believe that we could transfer this loan back to our son after graduation. We didn’t check into this very well. First child attending college. Loans started at 40,000. The understanding was our son would pay this after graduation.

We had a business, at the time, and thought we could handle things until he was able. The business failed before graduation leaving no money. The loans were deferred several times because our son couldn’t make the payments. This was the only option. Either make payment or defer.

Later we found out we could consolidate and do an IDRP. We did that. The first year payments were only a couple hundred. The second year we were socked with an 700.00 per month payment. REALLY! Only option pay or defer. Deferred. The lender then sold the loan to another lender. We reapplied for another IDRP and the payments again went down to a couple hundred.

The second year again socked with 700.00 payments. Only option again was pay or defer. The total of the loan right now is 80,000. That’s 40,000 in interest. We know that we did this but we were led to believe that payments would be around a couple hundred a month in the beginning and they were more like around 400.

We were even shown a payment calculator at the school that supported what we were told. Now there is no way we can do it. We will never be able to pay this off in our lifetime. Neither we nor our son can make this payment. It is the sum of a house payment. Eventually, we will no longer be able to defer. Then what happens to us. Garnishments!! That would also kill us financially.

Are there any repayment plans out there for Parent Plus Loans that can go for 20 or 30 years?
Our son would at least make the payments. We know the interest will be high but what other alternative is there?

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Dear Karen,

If you default they will add on another 20 percent of the balance, or more, as a penalty. They can also administratively garnish your wages without suing you. If the debt remains unpaid and you retire, your Social Security benefits can be garnished.

There are options but I would urge you to use the official online calculator to see what the payments would be.

It sounds like the school and the servicer was not giving you all of your options. Bottom line though is deferring the loan will only make the situation worse, not better. Please try to avoid doing that again at all costs.


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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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