PLUS STUDENT LOAN NOW DUE

Morning Terry,
We have now come due in July 73,000 in Parents Plus loads we took out to help our daughter get thru college. 114 payments are @ 1, 079.00 per month……What!!!!! so I asked them what’s the next thing since we cannot afford this?, she said you could push it out for x amount of years at 750.00, and when you finish, the total loan amount will be 223,000.00 ….How can we get help with this?

SAVAGE SAYS: I feel your pain. I think there was a typo in your question — “load” instead of “loan” — but that’s certainly appropriate. PLUS loans carry a fixed interest rate of 7.9 percent — far higher than almost any other borrowing today, except for credit cards and loan sharks. You can extend the term of the loan, but as you noted, that just hugely increases the burden of interest over the long run.

Do you own your own home If so, this would be the right time to refinance into a fixed rate 30 year mortgage at around 3.5 percent — and pay down the student loans. But I don’t advise taking money out of your retirement funds — because you’ll need that money one day, and you might pay a 10% (under age 59-1/2) penalty, plus taxes to get at that money now.

If you don’t have a house to mortgage, you need to work out a repayment plan. You can’t simply declare bankruptcy, because this is a Federal student loan, and it is not excused through the bankruptcy process!? If you don’t pay, and if you ignore them,they will eventually garnish your wages — and if you’re retired they will take money out of your Social Security check. I wish I could offer you a better solution, but short of winning the lottery, just trudging on through the reduced payments is all you can do.