Many parents take out Parent Plus Loans on behalf of dependent undergraduate students to bridge the gap between federal student loans and remaining college tuition. With college education costs at an all-time high, many parents wind up taking on substantial student loan debt to help their children get through school. Today, 3. 6 million parent borrowers owe over $96 billion in Parent Plus Loans and, unfortunately, many are struggling to pay them back.
Of course, parents want their kids to succeed, but what seemed manageable early on can sometimes create a financial strain for parents as sources of income become more limited due to age or other unforeseen factors such as a job loss or increased expenses of their own. Shouldering student loan debt over long repayment periods can only make a difficult financial situation worse leaving many parents wondering what they can do to tackle student loan debt.
Remedies to Consider When Tackling Parent Student Loan Debt
Transferring a Parent Plus Loan to a child is an option parents may want to consider. To absolve a parent’s responsibility for a Parent Plus Loan, borrowers can transfer PP loans back to their child following graduation about the time a child acquires gainful employment and is able to start making payments on the loan. Even if parents are intent on continuing to help a child out, shifting the loan back to the child might result in lower interest rates and lower payments.
Refinance Parent Plus Loan Through Private Lenders
Those who do not want to transfer Parent Plus Loans to their child may want to refinance through a private lender. In any given school year, parent plus loans receive the same interest rates – in the 2019 – 2020 school year interest rates were 7.08% with a onetime fee of roughly 4% of the amount borrowed. Parents with good to excellent credit scores may qualify for substantial savings by shopping around for a better interest rate in the first place or refinancing Parent Plus Loans during the repayment period.
Although student loan debt is rarely discharged in a bankruptcy, parents facing financial hardship may be able to discharge other debt such as credit cards and medical bills in a Chapter 7 bankruptcy making it easier to tackle student loan debt. For those who have assets like a home or car they want to keep, a chapter 13 bankruptcy repayment plan may be a solution to pay debt down over a 3 to 5 year period, with remaining non secure debt discharged at the end of the repayment period.
Contact a Peoria Bankruptcy Lawyer for Help
The first step in solving any difficult financial situation is getting all the information you need to make an informed decision. Contact the bankruptcy law offices of Charles E. Covey to see if bankruptcy protection is a good strategy for you and your family at 309-674-8125.