I am a parent with a six figure balance on consolidated PP loans for multiple children. I am making the payments.
I would like to comment about PP loans from a parent's perspective.
Most parents want to support their children through college. Many can't afford to pay so they look for financing options. The students can't qualify on their own beyond the FAFSA. Without parental help, they may not be able to attend college without going part time while working or working for a few years and saving first.
The parents can either cosign private loans or take out federal PP loans. Private loans are widely recognized as being less desirable than PP loans.
Some parents who take out PP loans do so thinking they are more like a cosigner rather than the primary borrower. Others realize they are the primary borrower but have the understanding that the student will be paying, especially if they can't afford it but want their child to have the opportunity to go to college and have a better life. Still others plan to take full responsibility and do make the PP loan payments, but some have a setback that impacts their ability to repay (job loss, divorce?).
In any case, the parents are taking the loans so the student can go to college. Years later after graduation, there may be misunderstandings. The student may not have fully understood the expectations, the parents may not have fully understood their legal obligations.
Nevertheless, the loans exist and family relationships could be permanently damaged. I find it disheartening how many people jump to "screw the parents, it's their loan."
I believe it's best to find the best payment plan available for the PP loans, then determine the best way to tackle them. It could be that the parents make the payments, the children make the payments, or some combination of both.
If everyone could address the issue together without placing blame, a solution may be found.
Parent Plus Responsibility
byu/Imaginary_Shelter_37 inStudentLoans
Posted by Imaginary_Shelter_37
7 Comments
Legally, the answer is that the parent is responsible for the loans. It is their responsibility to ensure that they are paid, however that is, or face the consequences. Whatever individual agreements people come to, any advice given ultimately falls back on whomever is legally responsible for the loans. If you are taking out a loan, then you have to do your part to know what you’re taking out, especially when the parent is the one who determines the payment plan.
In an ideal world, every family will come to a peaceful resolution, but that isn’t the neat reality many posters asking for help with PPlus loans have.
Well obviously it’s best if the family can work together on this, but the parents signing these documents are fully fledged adults who are responsible for teaching their children about legal and financial responsibilities. The parents are 100% the ones who are legally responsible. They sign multiple forms each year saying exactly that. This is not in the fine print–it is front and center, everywhere. The kids are benefiting, without a doubt, but a 17 year old signing up for college has no frame of reference for the magnitude of these loans. They don’t have a fully developed brain, barely understand how much food truly costs–and then parents try to blame the kids for the massive debt the parent legally agreed to take on.
Mostly, I think students should be able to get more loans in their own names; the amounts have not changed in 20 years, as costs have gone up and other grant and low income options have disappeared. Ideally, more grants should be available. Parents should also encourage their kids to go to less expensive schools, including community college, particularly if the burden of the loans the parents are taking out will be too high for the parents to repay on their own, as they are legally agreeing to do.
Too many families don’t discuss this when taking the loans out. But either way, parents shouldn’t take the loans out unless they’re prepared to pay them.
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I don’t see any parents on here offering to help make their kids’ student loan payments for them.
Parent plus loans exist because the kids already took out their own loans.
Everyone needs to pay the loans they’re responsible for. Kids pay their loans, parents pay theirs. The answer should almost never be “kids pay both.” (The answer should actually be student loans shouldn’t exist at all, but that’s an issue for another day.)
From a financial planning perspective, it’s really poor practice to have your child help repay the loan. The goal is for the entire family to have more wealth going to college than not (entire family being parent and child).
So, the conversation should have started before college started on selecting an affordable school.
But now in repayment, there’s still wealth building implications. Your child’s 22-45 is their prime earnings and income growth period. They want/need money to start a family, buy a home, etc. and you sucking money out of their account and upwards to your loans. That’s really harmful.
If you really cannot afford your PPL, you can consolidate, enroll in income-driven repayment, and have a payment that reflects your current income. Furthermore, you’re older and have forgiveness options: maybe PSLF, there’s total disability discharge, death discharge, and time-based loan forgiveness. Basically multiple ways to forgive the debt. Any money your child pays towards the loan that’s eventually forgiven is effectively wasted.
In situations where you’re not in a difficult financial straight, it’s even more egregious. You take money from your children from 22-45, only to give them assets/money back when you die (and you children are now 55-65). That’s pretty pointless – give mom/dad money now so we can give it back to you as an inheritance…
So, again, from a financial planning perspective, adult children should never, ever pay towards their parent’s PPL.
I’m with you and appreciate this thoughtful post. Every family and situation is unique and there is not absolute one-size-fits-all answer, despite the strident replies to this post. The point you are making is that- that families can be damaged by lack of clear communication about expectations – reflects your wisdom and maturity. I am also paying PP loans and I have always expected to do so, but it still makes me queasy when I read the “screw the parents” comments on here.