Post by abbey1227 on Jun 7, 2021 13:31:50 GMT
You're gonna need it..........
The New York Times
A Federal College Loan Program Can Trap Parents in Debt
Tara Siegel Bernard Mon, June 7, 2021, 7:10 AM
Kate Schweizer and her husband didn’t want their two daughters, just 13 months apart, to begin their adult lives saddled with college debt, so they borrowed much of the money themselves. Beginning in 2005, the couple took out a new batch of federal loans each academic year, eventually accumulating about $220,000 in debt.
Today, they owe half a million dollars.
“Even though the cost of tuition seemed insane, I convinced myself that it would all make sense and pay off in the end,” Schweizer, 65, said. “I had hoped that since my husband had a solid, union job, we would — we should — be able to afford this.”
But as they borrowed more each year, their monthly payments began to climb, until they reached $1,500. “We tried repeatedly to renegotiate the interest or the balance, or the payments, any part of it, many times,” she said. “It was ‘No, thanks — put it in forbearance or hardship with 8.5% interest,’ over and over again.”
The Schweizers took parent PLUS loans, which are underwritten by the federal government and have become popular with parents who want to borrow to help pay for their children’s education. Although the Schweizers, who live in the New York metropolitan area, carry more debt than most, many parents have turned to such loans as college costs have rocketed past wage growth, researchers say.
Parent PLUS loans now account for nearly a quarter of new federal borrowing for undergraduates. And while they are still just 6% of the $1.57 trillion in current federal student debt, and can let families of more limited means have their children attend the college of their choice, they can be problematic because they allow families to borrow without regard to their ability to repay.
A Federal College Loan Program Can Trap Parents in Debt
Tara Siegel Bernard Mon, June 7, 2021, 7:10 AM
Kate Schweizer and her husband didn’t want their two daughters, just 13 months apart, to begin their adult lives saddled with college debt, so they borrowed much of the money themselves. Beginning in 2005, the couple took out a new batch of federal loans each academic year, eventually accumulating about $220,000 in debt.
Today, they owe half a million dollars.
“Even though the cost of tuition seemed insane, I convinced myself that it would all make sense and pay off in the end,” Schweizer, 65, said. “I had hoped that since my husband had a solid, union job, we would — we should — be able to afford this.”
But as they borrowed more each year, their monthly payments began to climb, until they reached $1,500. “We tried repeatedly to renegotiate the interest or the balance, or the payments, any part of it, many times,” she said. “It was ‘No, thanks — put it in forbearance or hardship with 8.5% interest,’ over and over again.”
The Schweizers took parent PLUS loans, which are underwritten by the federal government and have become popular with parents who want to borrow to help pay for their children’s education. Although the Schweizers, who live in the New York metropolitan area, carry more debt than most, many parents have turned to such loans as college costs have rocketed past wage growth, researchers say.
Parent PLUS loans now account for nearly a quarter of new federal borrowing for undergraduates. And while they are still just 6% of the $1.57 trillion in current federal student debt, and can let families of more limited means have their children attend the college of their choice, they can be problematic because they allow families to borrow without regard to their ability to repay.
When the couple took out their federally backed loans, they earned too much to receive aid that doesn’t need to be paid back, Kate Schweizer said. But private college was out of reach without heavy borrowing, so they borrowed.
Their elder daughter graduated with honors at the end of 2008, after 3 1/2 years, for which her parents borrowed about $114,000. They took on $107,000 for their younger daughter, who graduated from Manhattanville College in 2010. Today, their daughters carry additional debts, largely for graduate school, but are enrolled in income-driven repayment plans.
On top of the loans, there were car repairs, dental work and other unexpected costs that would throw the couple’s budget off course. Their credit card balances mounted while their daughters were in college. Eventually, they filed for bankruptcy in March 2010, just before their younger daughter graduated, and their debts were discharged in 2012. They started the foreclosure process the next year, and moved to a rental.
Today, their standard monthly payment would be around $5,000, according to a July letter from their loan servicer. The income-based plan would bring it down to about $2,200, as estimated by a calculator, and it would be paid off when the Schweizers turned 85 and 90. After Kate Schweizer said they couldn’t afford to pay that much, they were permitted to put their loans in forbearance again.
The “scolds” who say they borrowed too much are right, Kate Schweizer said. “But now what do I do?”![[rolleye1]](//storage.proboards.com/7182076/images/MTjbungPBOzv0BKQvdPJ.gif)
This article originally appeared in The New York Times.
Their elder daughter graduated with honors at the end of 2008, after 3 1/2 years, for which her parents borrowed about $114,000. They took on $107,000 for their younger daughter, who graduated from Manhattanville College in 2010. Today, their daughters carry additional debts, largely for graduate school, but are enrolled in income-driven repayment plans.
On top of the loans, there were car repairs, dental work and other unexpected costs that would throw the couple’s budget off course. Their credit card balances mounted while their daughters were in college. Eventually, they filed for bankruptcy in March 2010, just before their younger daughter graduated, and their debts were discharged in 2012. They started the foreclosure process the next year, and moved to a rental.
Today, their standard monthly payment would be around $5,000, according to a July letter from their loan servicer. The income-based plan would bring it down to about $2,200, as estimated by a calculator, and it would be paid off when the Schweizers turned 85 and 90. After Kate Schweizer said they couldn’t afford to pay that much, they were permitted to put their loans in forbearance again.
The “scolds” who say they borrowed too much are right, Kate Schweizer said. “But now what do I do?”
![[rolleye1]](http://storage.proboards.com/7182076/images/MTjbungPBOzv0BKQvdPJ.gif)
This article originally appeared in The New York Times.
![[cheers]](http://storage.proboards.com/7182076/images/engyBVslEdpmpmdnBwZQ.gif)
