Ask Terry Questions Student loan payment question from a parent

Student loan payment question from a parent

By Terry Savage on June 01, 2021 | College Savings / Student Loans

Hi Terry,

Thank you for taking my question. My daughter is a masters level nurse and has 47,000 in student loans. She has worked for a not for profit for two years and in 8 years will be eligible for PSLF. We know student loan forgiveness is not in the budget now and the pause in student loan payment stops in September. My husband and I are in a financial position to gift her 15,000 each and wonder if we should put the 30,000 toward the student loan after the pause is stopped or wait?

We understand President Biden is waiting for a legal opinion as to whether or not he can do this. However, we believe at the most 10,000 could be forgiven but not 50,000. That large amount seems far too unrealistic to us. We feel the masters degree she earned has been helpful in her career but the debt is standing in her way of making other moves like buying a home, etc. Any direction would be greatly appreciated.

Terry Says

I think it would be wonderful if you wanted to make a direct gift to the student loan servicer to pay down a portion of her debt. It will save her lots of interest in the future! And yes, I doubt that the entire loan will ever be forgiven by any administration.

BUT she should also look into the PSLF –Public Service Loan Forgiveness — program. But she has to sign up for the program for her payments to count. Please read the recent article on my website with all the details. If she qualifies, she should sign up immediately because the first two years of payments she has already made likely won’t count!

Finally, I caution you to not make this gift if it will impact your OWN retirement plans.

Recent College Savings / Student Loans Questions

money

ASK TERRY

a personal
finance question