Culinary Institute of America Talked Me Into a Parent PLUS Loan


Dear Steve,

I am a single working mom. My son was accepted to the Culinary Institute of America Hyde Park in September 2017.

The Institute told me I could apply for a Parent Loan to help my son. However, I told them my credit was poor, and I definitely would not be accepted.

They told me that my son would get another $4,800—credit to his account just for applying and not approved. So, I applied and was shocked to see that I was approved for a $20,000 loan. I was too ashamed to say I could not afford it. But, I felt pressured to accept it for my son.

It is a federal parent loan at 7% interest. Because of the pandemic, I have not had to make payments. I sent some payments in, which were in the $18,000 range. It is now at approx $20,500.

I am 57, and this is a large debt. Should I refinance at a lower rate if possible? My credit is fair right now.

Is it misleading on the school’s behalf to have me apply for a parent loan, telling me when I am denied, my son will get an automatic credit of $4,800 for me being denied. And I was accepted with a poor credit score?



Dear Michele,

Nothing you’ve shared shocks me.

It sounds like the school said what they could to close the sale.

A Parent PLUS loan is a federal loan, and the lending requirements are relatively lax since the government knows you can’t escape.

Refinancing it into a private loan would not be a wise idea.

What you could do is consolidate your Parent PLUS loan into a Direct Consolidation Loan (for free) and then opt for an income-contingent repayment plan (ICR).

ICR plans can help you reduce the payment and can be reduced further when you retire, but they will probably never be repaid or forgiven during your life.

Outside of paying the loan off on the regular 10-year plan, this approach with an IBR can help reduce monthly financial stress as long as you understand you are throwing your hands up on ever paying the loan off.

See also  The Government Did a Bank Levy for My Mother-In-Laws Parent Plus Loan


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