November 6, 2009

Parent Plus Loan Holders Get The Repayment Shaft

Posted in Parent PLUS Loans tagged at 11:29 AM by dbonvie

Friday Rant (Opinion Piece)

When it comes to repaying loans for higher education it is often the student we think of first, and with good reason, but what about those parents who have over extended themselves for their children? Some of them are in debt way over their head. What can they do to help their cause? If you are thinking about an Income-Based repayment plan, think again. You are not eligible.

Students who hold a Stafford, Grad Plus, or a consolidated bundle of both are eligible to enroll in an IBR plan if they demonstrate financial need, according to a federal formula that essentially limits monthly payment to no more than 15% of discretionary income. Borrowers can also report a $0 income if they are unemployed as well. $0 payments are allowed under the IBR plan which is fantastic. So what about the parents?

Are some parents not unemployed? Why are they not eligible for the same assistance? It sounds like a double standard to me. These parents who work hard their whole life and have hit hard times because of the economy are told, sorry, deal with it? That’s not right.

Still, a parent can utilize the 36 months worth of deferment time they are extended, but that just delays the inevitable and capitalized interest will continue to roll. It’s like trying to plug a hole in the Titanic with some taffy.

Don’t get me wrong, I love students and want them to have every advantage when it comes to paying off high school loans, but let’s not forget about Mom and Dad who have given us so much.