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A12 BUSINESS
Friday 21 april 2023
Relief options if you’re in debt from

your kid’s education

By ELIZA HAVERSTOCK of
NerdWallet
In January, the Depart-
ment of Education un-
veiled details of a repay-
ment plan overhaul that
could halve monthly pay-
ments for many federal
student loan borrowers. But
one group, the 3.7 million
parents who owe parent
PLUS loans, won’t benefit.
Policymakers have long ex-
cluded parent PLUS loans
from most relief, though
the program looks much
different today than it did
during its 1980 debut.
While parent PLUS loans In this June 27, 2020, file photo, Saltillo High School seniors make
were initially intended as their way to the football field as the sun begins to set for their
a tool for well-off families, graduation ceremony in Saltillo, Miss.
says Robert Kelchen, a Associated Press
higher education profes-
sor at the University of Ten- they have their own debt you can sign up for an In-
nessee, Knoxville, they’ve that they’re carrying. And come-Contingent Repay-
increasingly become the on top of that, they’re car- ment plan.
loan of last resort for lower- rying their children’s debt, PUBLIC SERVICE LOAN FOR-
income families. Parents, and the children are also GIVENESS
who can borrow up to the in debt.” Though the lat- Parents who work for non-
total cost of attendance est payment plan overhaul profits and government
per child (minus other fed- won’t help, there are other sectors may qualify for the
eral aid) with PLUS loans, options to get debt relief Public Service Loan For-
use the loans to fill funding for parent PLUS loans. giveness program, which
gaps after their student hits PERMANENT FEDERAL RELIEF forgives remaining debt
the borrowing limit of no PROGRAMS after a decade of repay-
more than $7,500 per year INCOME-CONTINGENT RE- ment. Borrowers must con-
from the government. PAYMENT solidate their parent PLUS
Parent PLUS loans come An income-driven repay- loan into a direct loan and
with higher interest rates ment plan extends your sign up for Income-Contin-
and higher origination loan term, can lower your gent Repayment before
fees than undergraduate monthly payments and applying for PSLF.
federal student loans, fur- can lead to forgiveness. The parent who originally
ther accelerating the debt Four income-driven repay- took out the loan not the
pileup. In total, parent ment plans are available child who benefited from
PLUS loan borrowers have for federal student loans, the loan must work for a
racked up $108.5 billion in but parent PLUS loan bor- qualifying employer.
loans more than $29,000 rowers are eligible for only DEFERMENT OR FORBEAR-
per borrower on average. the Income-Contingent ANCE
These are intergenera- Repayment plan. Pay- Payments on all federal stu-
tional debts,” says Alpha ments are capped at 20% dent loans are expected
Taylor, a staff attorney at of a borrower’s monthly to resume this summer, but
the National Consumer discretionary income for 25 borrowers can still request
Law Center in Washington, years. Any remaining debt payment pauses known as
D.C., focused on student is forgiven after that time. deferment or forbearance
loans. “The parents have You must consolidate your if they face financial hard-
their own student loans, so parent PLUS loans before ships.
Consider other relief op-
tions first: Interest will ac-
cumulate during these
pauses, and it will be add-
ed to your principal loan
balance once payments
restart. “You can have
a situation where you’re
spending more time pay-
ing off interest than paying
down the principal,” Taylor
cautions.q