How To Ditch Your Parent PLUS Loans Before Retirement
Parent PLUS loans are the enemy of your estate plan. If you are thinking about taking out a Parent PLUS loan to fund your child’s college or postgraduate education, don’t do it. Of course, this advice does not help you if you have already borrowed one and are now responsible for paying it back. There is no limit to the amount you can borrow in Parent PLUS loans, so it is possible that your loan balance is more than you could ever repay, even if you put most or all of your retirement savings toward it. An Orlando estate planning lawyer can help you prepare your finances for retirement, which may necessitate getting rid of your Parent PLUS loan without paying the balance in full.
Why Parent PLUS Loans Are Bad News
Parent PLUS loans are federal student loans borrowed by parents to fund their children’s postsecondary education. It is very easy to qualify for these loans, and the amount you can borrow is limited only by the price tag of your children’s education. If you have three children, and one goes to medical school, one goes to law school, and one gets a Ph.D., all funded by Parent PLUS loans, you could be on the hook for a million dollars. If you can’t keep up with the payment, there are income-driven repayment plans, but those are a young person’s game.
Which Loan Forgiveness Strategy Is Best for You?
If you had enough money in your bank accounts to pay for your children’s education, you would not have taken out a Parent PLUS loan, so how does the parent of a college graduate get a Parent PLUS loan forgiven or otherwise discharged? Here are some suggestions from MarketWatch:
- Income-driven repayment – This requires you to pay 20 percent of your discretionary income for 25 years, and then the loan gets forgiven. It may be the best option available to you, but it will require you to rethink your estate plan.
- Public Service or Disability Loan Forgiveness – You might qualify for loan forgiveness if you became disabled after borrowing the loan or if you work for a government or nonprofit employer.
- The Closed School Defense – You might qualify for loan forgiveness if your child’s university closed before your child graduated, or if your child attended a for-profit college that was shut down because of deceptive business practices, even if your child graduated or left without graduating before the school closed.
- Refinance in Your Child’s Name – This isn’t exactly loan forgiveness, but it takes the burden off of you, enabling you to focus on your estate plan.
Let Us Help You Today
Debt is a reality for the current generation of Americans approaching retirement, but an estate planning lawyer can help you implement a debt repayment strategy and build an estate plan that works for you. Contact Gierach and Gierach, P.A. for help today.