Do you need to help your parents to pay your student loans
According to a recent study by Sally Mae, only 48% of parents are currently putting aside funds to educate their children in college. Whether due to poor planning, rising college expenses, loss of employment, or other extenuating circumstances, many parents take student loans on behalf of their child to pay for their education.
Although it is generous and sometimes necessary, it also burdens many parents. They are often left to pay the loan “Parent Plus” much later than their graduates, and sometimes retired.
So, should children repay their parents and help with the Parent PLUS loan repayment if their parents took out a loan on their behalf? Should they refinance loans in their own name? Or should they allow their parents to pay loans, since how did they get them?
There are no simple answers to these questions; however, it really depends on the circumstances of each case.
Sometimes children do not know much later that this is how their parents financed their education. At the same time, parents may not be aware of the burden that loans will place on them until many years have passed.
Who is legally responsible for parenting PLUS loans?
Legally, a parent who takes a loan in his own name is responsible for paying off the Parent PLUS loan. This is because the parents decided to take out a loan specifically for their child, agreeing to repay it.
The only way to change it now is to apply for a refinancing loan in the name of this child.
However, the child should do this only if he wants it, and can comfortably pay the student loan on time every month.
Should you take on the repayment of loans?
So what if you can’t or can’t refinance PLUS your parents ’loans to your name? Should you just offer to pay them?
This is a difficult question, and it definitely depends on the situation. But in some cases, the return of these loans may be the right decision. This may be the case if
you have a good relationship with your parents
you have a solid, highly paid job,
you can afford the payments and
You do not want to burden your parents in retirement.
Personally, I would not want to burden my parents with a student loan. If they had taken a loan on my behalf, I would probably have taken a loan or at least planned automatic payments for them from my current account until the loan was repaid. I do not like to feel that someone is stuck in debt or postpones retirement because of me.
However, I have a pleasant neighbor who is a retired teacher and a mother who pays a student loan on a Parent PLUS loan every month. She lives in the expensive part of the country next to her family, but since she is modest and does occasional work on the side, she can also regularly repay her Parent PLUS loan and still retire.
Facilitating loan repayment Parent PLUS
If you cannot afford to accept payments for your parents, but still want to help, you can recommend how your parents can make Parent PLUS loans more manageable.
On the one hand, they can consolidate and refinance PLUS loans into a private loan. If they qualify for a lower interest rate to help save money during the life of the loan. It will also reduce the number of loans that they need to track, simplifying payment arrangements.
Your parents can also check whether they have the right to a payment plan with a conditional income, which will require them to pay no more than 20% of their discretionary income to pay the student loan each month. After 25 years of payments, loans are forgiven.
Ultimately, leaving your parents burdened with student loan loans for your education is not an ideal situation. This can cause family disagreement about who should be responsible for paying off a student loan, and can burden your parents and possibly even delay their retirement.
It is best to talk with your parents, have an open dialogue and try to find a way through which you can work together to cope with debt, regardless of whether you contribute to repayments or fully accept the loan.
For more info : https://studentloansresolved.com/