Question: I’m a US Army veteran, and I’m paying off a loan I took to send my kid to college, but the interest was crushing from day one. I’m 60 and I don’t know if I can retire because I still owe $36,000 in original student loans. My credit card debt is now $17,000 – the balance was a 1/3 of that, but it kept rising as the original student loan payment chewed up my monthly discretionary money for credit card payments. I’m afraid I’ll die with debt without a chance for retirement. I am tired and have been working continuously for almost 45 years. I live in a barrage of hope, and the likely reality that I will live until I stop trying to pay off the debts that are affecting my physical and financial life. What should I do?
Answer: “I find many parents in this situation, so know that you’re not alone,” says Pamela Rodriguez, financial advisor at Integrated Partners. “I have had many conversations with parents and students that student loans are a huge black hole with no end in sight. It can be financially and emotionally exhausting trying to navigate the student loan system,” Rodriguez says. Huh. The good news: There are options that can make loan repayments faster and/or easier for borrowers, including loan forgiveness, income-based repayment options, and the like. loan refinancing.
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In your case, the fact that you are a veteran may work in your favor, as there are many resources such as In Available for military and veterans. “Veterans may be eligible for special programs that waive interest or possibly waive debt liability,” Rodriguez says. Note that parent PLUS loans taken on behalf of a student may be eligible, but private parent PLUS loans are not eligible. Also look at other loan forgiveness options Here,
You may be able to lower your monthly payments to make them more manageable. Although Parent PLUS loans are not directly eligible for income-driven repayment plans, if your Parent PLUS loan entered repayment (the period in which one begins repaying the loan) on or after July 1, 2006, and you Consolidating it into a federal direct consolidation loan, the consolidation loan is eligible for income-contingent repayment. “Basing monthly loan payments on a percentage of the parent’s discretionary income,” says Mark Kantrowitz, author of “How to Appeal for More College Financial Aid.” After 25 years, the balance amount can be forgiven. While this may not help you pay off loans faster, it will reduce your monthly costs, which may help you pay off that credit card debt more quickly. you can read the description Here,
It might be time to ask your child to help you bear the burden of this debt. Rodriguez says this refinance is worth researching (See the Lowest Student Loan Refi Rates You Can Qualify for Here) “A Parent PLUS loan can be transferred to the student via refinancing,” Rodriguez says. You can read more about the process Here, “Unfortunately, when a Parent PLUS loan is refinanced, the student loses access to federal repayment options and they are no longer eligible for income-contingent repayment,” she explains. Consider that before you refinance.
Note that it may be best to attempt to pay off credit card debt before attempting to aggressively pay off Parent PLUS loan debt, as the interest on credit card debt can be higher. “Any Basic PLUS loan will make the required payment on the loan and use all remaining funds to pay off the credit card balance. Don’t charge the credit card any more,” Kantrowitz says.
Although there has been talk of the president creating a new student loan forgiveness program, Kantrowitz says it is likely to be limited in amount and eligibility. “The $50,000 in loan forgiveness would cost more than $1 trillion dollars and wipe out 80% of borrowers’ federal student loan debt. Even the $10,000 in loan forgiveness that accounts for a third of borrowers’ federal student loan debt. The cost would be $373 billion. If they limit the forgiveness to only borrowers of $10,000 or less, the cost would be $75 billion. It would be better targeted at borrowers who are facing economic distress ,” Kantrowitz says.
“The good news is that there are options out there,” Rodriguez says, “but they may require a little leg work to find out what’s available for your individual situation.”
*Edited question for clarity and brevity.