180K in Parent Plus student loan

[BlueHouse]

My brother has 180K in Parent Plus student loans in his name that he took for his daughter's education.  She graduated 3 years ago, yesterday was the first payment that he had to make $2300/month and now he's panicking. 

He says he wants to:
1) refinance at a lower rate (currently is 7.5%)
2) Transfer into his daughter's name because they are her loans and she agrees that she is responsible for them.
3) find some way to reduce payments or total amount owed (she makes about $70-75K, while my brother makes way too much to get any subsidies)

Any thoughts on what he can do or where he should start?  He says he's started researching and can get a loan down to 5%, but he doesn't know the minefields to look out for, etc. 

Any advice will be helpful.  Thanks

[cincystache]

wow, so many thoughts.

1) refinancing excludes you from any eventual federal forgiveness or income-based repayment options so I don't love that option especially if he is going to push these onto his daughter.

2) This is dependent on the relationship so hard to comment but it sounds like kind of a jerk move to take out a loan in your name for your daughter's education and then saddle her with the debt at the end when the payments come due. Was this discussed with her prior to starting a program that cost 180K and only led to a 70k income? I can't ever imagine doing this to my child particularly if I was making a high income as you state. I would tell the brother to put on his big boy pants, stop "panicking", and figure out how to cash the check his big mouth wrote 3 years ago when he said he would "help" pay for college. This is the opposite of helping if he just wants to push all the debt to her.

3) You might see what sort of IBR programs are available for her if he transfers the loans into her name. The new SAVE plan seems pretty attractive and since she has a low income her payment will likely be small but required for 20 years before forgiveness. studentloanplanner.com has pretty good info.

I would NOT go private lender for 5% unless your brother is going to be a good person and take full responsibility for the HIS payments and use his "way too much" income to pay these off asap.

If you want to go the income-based route in her name, leave them as federal loans so she can take advantage of the current and future programs available to her (including potential forgiveness). Tell her to come to this forum for financial advice and not her dad, he is clearly unqualified to make any financial decisions on her behalf.

Sorry if I was a little too hard on your brother. Good luck counseling him and more importantly your niece through this mess. 

[economista]

There is no way to move them to her name and keep them federal. The only way would be to refinance them into her name only, and that would require a bank willing to put them in her name without a cosigner which likely won't happen. Your brother's best bet is to apply for an income based payment plan, like the SAVE plan, but it will still be in his name using his income. You might be surprised at how much the payment is lowered, but just remember that it drags out how long he (or she if she makes the payments) will be paying.

Even high incomes will probably see a decrease in payment amounts compared to the standard 10 year repayment schedule. In my case I make $120k, have a balance of $118k, and my payment went from 1200 per month to $532. I'm ok with that because I will get PSLF in 2024 anyway, so I want to keep my payments as low as possible until that happens.

[roomtempmayo]

My brother has 180K in Parent Plus student loans in his name that he took for his daughter's education.  She graduated 3 years ago, yesterday was the first payment that he had to make $2300/month and now he's panicking. 

He says he wants to:
1) refinance at a lower rate (currently is 7.5%)
2) Transfer into his daughter's name because they are her loans and she agrees that she is responsible for them.
3) find some way to reduce payments or total amount owed (she makes about $70-75K, while my brother makes way too much to get any subsidies)

Any thoughts on what he can do or where he should start?  He says he's started researching and can get a loan down to 5%, but he doesn't know the minefields to look out for, etc. 

Any advice will be helpful.  Thanks

If he genuinely can't pay, then he should enroll in an Income Contingent Repayment Plan, which is the only income based plan that can be used for Parent Plus loans.  Details are here: https://www.consumerfinance.gov/paying-for-college/repay-student-debt/federal-parent-plus-loans/ 

This will not reduce principle or the interest rate.  It will only reduce the monthly payment, and after 25 years of payments any remaining balance will be forgiven.

Parent Plus loans are a bit of a trap since repayment is based on the parents' income and work, not the student's.  So a student can do a job in public service or that qualifies for all sorts of programs (i.e. rural medicine, underserved dental, high needs teaching), but none of those programs affect the parents' loans.

To your questions:

1) He might be able to refinance below 7.5% by going to a private bank.  Discover is advertising as low as 4.5% right now.

The minefield is that once you refinance to a private lender, you can never refinance with the government.  It's a one way street, which means you're opting out of any and all future forgiveness or programs.  For example, during the pandemic private student loans were in repayment as normal, and there are no income based plans to repay them/eventually get forgiveness.

2) Can't do it.  The Expected Family Contribution (i.e. what you get Parent Plus loans for) is designed to stay separate from the student's responsibility.  The daughter can voluntarily pay on them, but dad can't make them her legal responsibility.  They will always appear on his credit report, and not on the daughter's.

3) If he doesn't go the Income Contingent Repayment route, he might be able to lengthen the term to lower the payment with private refinancing, or plead hardship to get a temporary forbearance, but the reality is that he signed his name for $180k that he spent for his daughter.  It's not monopoly money.  If he makes "way too much to get any subsidies," he should be able to carve $2300/mo out of his budget to pay back the loan.

There's no easy way around the fact that he owes a lot of money and now payments are due.  His only real choice is whether he wants to do what it takes to pay now, or if he wants this to dog him for the next 25 years.

[roomtempmayo]

Your brother's best bet is to apply for an income based payment plan, like the SAVE plan, but it will still be in his name using his income.

I mentioned this above, but Parent Plus loans can only use Income Contingent Repayment, which is basically the worst income based repayment plan.  SAVE is not available for parents, only students.

2) This is dependent on the relationship so hard to comment but it sounds like kind of a jerk move to take out a loan in your name for your daughter's education and then saddle her with the debt at the end when the payments come due. Was this discussed with her prior to starting a program that cost 180K and only led to a 70k income? I can't ever imagine doing this to my child particularly if I was making a high income as you state. I would tell the brother to put on his big boy pants, stop "panicking", and figure out how to cash the check his big mouth wrote 3 years ago when he said he would "help" pay for college. This is the opposite of helping if he just wants to push all the debt to her.

It sounds like he thinks they're for her school, which is correct.  But the price paid was largely a function of his income.  What he wants to do is worse than cutting her loose at 18 and having nothing to do with her financially, in which case she would have gotten much better financial aid.  The cap on Federal undergrad loans to students is $38k, so there's no way she'd have gotten herself in this kind of debt without him.

[Catbert]

I know pretty much nothing about student loans so no helpful info for your brother.  I gotta say that trying to palm off the payments on this daughter is a dick move.  She was presumably a teenage when she picked her university and he was a fully grown up adult who signed the loan papers.  He should have anticipated generally what the payments would be.  As roomtempmayo said the size of the family contribution was determined by your brother's income not your niece's.

He's had 7+ years to plan for making these payments and he just woke up now?

[BlueHouse]

Thanks for the input.  Most were very helpful.  I'll have him check into Income Contingent Repayment, but he can actually afford to repay it, so he'll probably knock that off the list right away.  He'll probably end up refinancing to private at a lower rate.   Thanks for the tip for Discover. 

But ouch!  Some of these comments were pretty harsh!    I like to dunk on my brother, but it's hard to hear others do so.  Here's me being a bit defensive:

2) This is dependent on the relationship so hard to comment but it sounds like kind of a jerk move to take out a loan in your name for your daughter's education and then saddle her with the debt at the end when the payments come due. Was this discussed with her prior to starting a program that cost 180K and only led to a 70k income? I can't ever imagine doing this to my child particularly if I was making a high income as you state. I would tell the brother to put on his big boy pants, stop "panicking", and figure out how to cash the check his big mouth wrote 3 years ago when he said he would "help" pay for college. This is the opposite of helping if he just wants to push all the debt to her.

It didn't seem to me like a jerk move.  When my siblings and I were in college, my mom took out a Plus loan for my oldest brother and mortgaged the house to get it.  It seems as if this is the idea for the American dream (at least back in the 80s).  Find a way -- any way -- to get your kid to go to college and they'll have a better outcome.  Yes, of course the repayment was discussed.  My brother said she couldn't attend big fancy school because it wasn't a good investment and she cried and said she'd pay for it.  Well, of course I wish she had mustachian parents who had taught her her whole life about value, but that didn't happen.  Anyway, she absolutely loved her college experience and that can be worth something too. 
I think $70K for her second year out of working isn't bad.  She found a job and is pretty good at it and was recruited from her first job into a competitor's shop for double what she made at the first one.  So, even though we're in a HCOL area and she can't afford a ton, she's doing okay with a roommate. 

"Doing this to a child"?  Yikes.  It's not as if he tortured her!  He found a way to make her dream come true and now they're trying to figure out a way to manage the consequences.  He's not trying to pull any scam.  He's looking for legal ways to reduce the repayment amount, much like all of us do with refinancing, using credit card miles, etc.   

Finally, "panicking" was my choice of words, because that's what I would do.  I realized long ago that I won't turn any of my siblings into mustachians, but I'm actually kind of glad that they know about it and what it stands for, they tell their friends about my "mustache friends" and they're pretty proud of how I turned my financial life around with this forum. 

[roomtempmayo]

Thanks for the tip for Discover. 

If he goes the private refinancing route, Sofi is another good option.

Good luck to him and his family.

[Sibley]

There are websites which compare interest rates between student loan refinancing companies. They don't all target the same markets and they have varying terms, so it is worthwhile to do the research.

Blue, kids whine and cry when they want something. That doesn't mean you let them stay up all night eating candy and ice cream. When you do however, you then have to deal with the consequences. He is now dealing with the consequences.

[BlueHouse]

Blue, kids whine and cry when they want something. That doesn't mean you let them stay up all night eating candy and ice cream. When you do however, you then have to deal with the consequences. He is now dealing with the consequences.

That seems like an apt comparison: begging for ice cream : begging for college.  :| 
Anyway, yes, he is dealing with the consequences.  That's why he asked for advice.  no one is trying to skirt any of the responsibility.

[cincystache]

Anyway, yes, he is dealing with the consequences.  That's why he asked for advice.  no one is trying to skirt any of the responsibility.

When you say "He says he wants to... Transfer [the loans] into his daughter's name because they are her loans and she agrees she is responsible for them."

That sounds EXACTLY like HE is trying to skirt responsibility and place the responsibility for paying HIS loan onto his daughter.
 
I just feel the need to deliver a mustachian "face-punch" for that line of reasoning specifically. Again, good luck to all parties involved sorting this out.

[FlytilFIRE]

Seems like a simple fix is to ask the daughter to pitch in what she can. If she starts out at $300/mo, and increases it as her salary goes up, it would ease the financial burden of the parents. It was a family decision to take on the debt. The family should work together to get out of it.

[therethere]

So does the daughter have any student loans herself? DH's parents took our Parent Plus loans on top of all the loans that DH took out. I feel like they took them at the max they could, and then went out and spent some of it on general lifestyle stuff because it's not like they sent DH any money directly. Either way, once we had a tackle on our own student loans (200k+) we started to direct like $500/month towards the Parent Plus loans until they were paid off. But this wasn't until we were a good 5-7 years into our careers.

But I see this as different, because the in-laws are not well off at all. Sounds like your brother can afford it he just doesn't want to afford it.

[Freedomin5]

Seems like a simple fix is to ask the daughter to pitch in what she can. If she starts out at $300/mo, and increases it as her salary goes up, it would ease the financial burden of the parents. It was a family decision to take on the debt. The family should work together to get out of it.

This makes sense to me. And can be based on daughter’s income. So if dad makes 210k and daughter makes 70k (all hypothetical numbers), then dad can contribute 75% of the monthly payment and daughter 25%.

If dad wants, since daughter begged and cried for fancy Expensive school instead of the local in-state cheaper school, and had Promised to pay it off, dad can keep track of the amounts he is contributing towards the loan, and once daughter’s income increases, she can also start paying dad back too, like an interest free loan.

But that means that daughter will need to be a big girl and live like a poor college student for the next several years.

[Villanelle]

*IF* he clearly told her at the time that she'd have to pay the loans, and she agreed, I don't think it's cruel or awful to hold her to that.  But it's not clear to me if that was actually discussed.

Regardless, he can't just "give" her the loan anymore than I could say, "hey, otherperson, my mortgage is now yours".  You'd have to get a bank to agree to that.  It sounds like she doesn't have the income for a lender to be likely to take this on, or, if she found one, it would be at even crazier rates.

Has he considered refinancing to the lowest rate he can find, and then just having his daughter send him at least some of the payment each month?  (Again, if it was clear and agreed upon that she would be responsible for the loans.)  they could work of the terms, whether that means he is willing to pay part of the loan payment each and just call that his contribution to her future. Or she'd be acruing debt to him (and under what terms) for the portion he pays because she can't foot the entire $2300 payment.  I'd lean toward the former, or some combination.  Since it sounds like he has a high income, him agreeing to pay half (or part) of the monthly payment seems like a nice thing to do for her, especially if there are no other kids (so equity and fairness wouldn't come into play).  They could even create a graduated plan, like she pays $500 per month now, and then in X years (or when her income increased by Y%), that increased to $600, etc. 

[simonsez]

2) This is dependent on the relationship so hard to comment but it sounds like kind of a jerk move to take out a loan in your name for your daughter's education and then saddle her with the debt at the end when the payments come due. Was this discussed with her prior to starting a program that cost 180K and only led to a 70k income? I can't ever imagine doing this to my child particularly if I was making a high income as you state. I would tell the brother to put on his big boy pants, stop "panicking", and figure out how to cash the check his big mouth wrote 3 years ago when he said he would "help" pay for college. This is the opposite of helping if he just wants to push all the debt to her.

It sounds like he thinks they're for her school, which is correct.  But the price paid was largely a function of his income.  What he wants to do is worse than cutting her loose at 18 and having nothing to do with her financially, in which case she would have gotten much better financial aid.  The cap on Federal undergrad loans to students is $38k, so there's no way she'd have gotten herself in this kind of debt without him.

It's amazing how much better off financially I would've been if I had moved out at 18 into my own apartment and then was responsible for paying my own way through fancy uni (since I was hellbent on that).  Instead, my parents and I were both clueless who wanted me to have the fully borrowed 4 year university experience.  Fast forward 6 years and 170k of Grad PLUS, Parent PLUS, sub and unsub Stafford loans turned into a Big 10 B.S. and ACC M.S. degree that allowed me to grab a federal statistician job in 2011 making 51k (GS-9 in DC).  The last student loan dollars were finally paid off in September of 2022.  I also had to make arrangements with my parents afterward about repaying the Parent PLUS (or a portion of it) as they were NOT financially able to make all of the payments.

But IDK, learning from that set of circumstances set my own path forward and motivation to not be totally ignorant of personal finance for myself as an adult, my potential spouse, and any potential children.  Would I have had the same fire to learn from my mistakes if I had only had to borrow 1/4 to 1/3 as much?  Hard to say!  But I feel like I was one of the luckier ones, there are so many recent grads who do not have decent paying jobs and mom and dad can be in for rude awakenings.  Sounds like daughter and dad can figure it out in this scenario.

[BlueHouse]

Sounds like your brother can afford it he just doesn't want to afford it.

Yep, that’s about it. I mean, he’s pretty spendy so he doesn’t realize how quickly he could pay that off if he wanted to. But like I said, it was always meant to be her debt…but I suspect he will pay off most of it with her contributing what she can. I have no idea if they’ll set up a formal allocation, but I do know that in 2 years of working, she saved over $20K knowing that the loans wouldn’t be deferred forever. So I think she may be learning the lessons better than her father.

[BlueHouse]

To add another wrinkle, he has $400k sitting in a High interest savings account for when he buys another house (not for at least 1.5 years, since he just signed a lease on an apartment).    He could just pay it all off with cash and have his daughter pay back over time.  I didn’t bring that up before because I think it’s so unlikely. It took me 4 months to convince him to move that money out of a low-interest account. 

[Cranky]

Anyway, yes, he is dealing with the consequences.  That's why he asked for advice.  no one is trying to skirt any of the responsibility.

When you say "He says he wants to... Transfer [the loans] into his daughter's name because they are her loans and she agrees she is responsible for them."

That sounds EXACTLY like HE is trying to skirt responsibility and place the responsibility for paying HIS loan onto his daughter.
 
I just feel the need to deliver a mustachian "face-punch" for that line of reasoning specifically. Again, good luck to all parties involved sorting this out.

I think a lot of families take out those loans with the explicit understanding that the kid will be responsible for them. Is that smart? Does it always work out? I’d say no, but I don’t see it as underhanded or mean, either.

[mistymoney]

Thanks for the input.  Most were very helpful.  I'll have him check into Income Contingent Repayment, but he can actually afford to repay it, so he'll probably knock that off the list right away.  He'll probably end up refinancing to private at a lower rate.   Thanks for the tip for Discover. 

But ouch!  Some of these comments were pretty harsh!    I like to dunk on my brother, but it's hard to hear others do so.  Here's me being a bit defensive:

2) This is dependent on the relationship so hard to comment but it sounds like kind of a jerk move to take out a loan in your name for your daughter's education and then saddle her with the debt at the end when the payments come due. Was this discussed with her prior to starting a program that cost 180K and only led to a 70k income? I can't ever imagine doing this to my child particularly if I was making a high income as you state. I would tell the brother to put on his big boy pants, stop "panicking", and figure out how to cash the check his big mouth wrote 3 years ago when he said he would "help" pay for college. This is the opposite of helping if he just wants to push all the debt to her.

It didn't seem to me like a jerk move.  When my siblings and I were in college, my mom took out a Plus loan for my oldest brother and mortgaged the house to get it.  It seems as if this is the idea for the American dream (at least back in the 80s).  Find a way -- any way -- to get your kid to go to college and they'll have a better outcome.  Yes, of course the repayment was discussed.  My brother said she couldn't attend big fancy school because it wasn't a good investment and she cried and said she'd pay for it.  Well, of course I wish she had mustachian parents who had taught her her whole life about value, but that didn't happen.  Anyway, she absolutely loved her college experience and that can be worth something too. 
I think $70K for her second year out of working isn't bad.  She found a job and is pretty good at it and was recruited from her first job into a competitor's shop for double what she made at the first one.  So, even though we're in a HCOL area and she can't afford a ton, she's doing okay with a roommate. 

"Doing this to a child"?  Yikes.  It's not as if he tortured her!  He found a way to make her dream come true and now they're trying to figure out a way to manage the consequences.  He's not trying to pull any scam.  He's looking for legal ways to reduce the repayment amount, much like all of us do with refinancing, using credit card miles, etc.   

Finally, "panicking" was my choice of words, because that's what I would do.  I realized long ago that I won't turn any of my siblings into mustachians, but I'm actually kind of glad that they know about it and what it stands for, they tell their friends about my "mustache friends" and they're pretty proud of how I turned my financial life around with this forum.

180k for one person with a 70k job. If these were in her name, she could work with lenders and have the payment reduced and balance perhapb forgiven after making IB payments on the save. On 70k her payment might be 375 and then forgiven after 20/25 years. Or could do PSLF in 10 years.

There has been no interest accruing for 3 years. So how did the balance get to 180K?

The thing about parent plus loans is that they let you borrow everything. So enough to pay tuition and fees, books and other materials, as well as room and board and all other expected expenses for a student to live. So a parent could qualify and borrow 150k when the cost of the entire degree and living expenses were only 100k. So a parent could borrow, pay for all expenses, and have left over money that they fix the roof with or something.

Beyond that, I think it really depends on what the agreement was and what the communication has been. Did she agree to pay this back? If so, why didn't she get her own private student loans? The interest rate on a parent plus loan is higher than for the student's own loans - did she max out her own federal student loans - which for a 4 year degree would probably be about 30-35k balance by now. Given brothers' income level she likely doesn't qualify for subsidized student loans.

Was she apprised of the interest rates being signed up for? the increasing balance as interest accrued? the amount of each loan taken out?

[reeshau]

Thw Massachusetts Attorney General published a process by which to make PLUS loans eligible for the SAVE program, by using 2 consolidation steps.  This is basically a loophole, and is scheduled to close by July 2025.

[Morning Glory]

2) This is dependent on the relationship so hard to comment but it sounds like kind of a jerk move to take out a loan in your name for your daughter's education and then saddle her with the debt at the end when the payments come due. Was this discussed with her prior to starting a program that cost 180K and only led to a 70k income? I can't ever imagine doing this to my child particularly if I was making a high income as you state. I would tell the brother to put on his big boy pants, stop "panicking", and figure out how to cash the check his big mouth wrote 3 years ago when he said he would "help" pay for college. This is the opposite of helping if he just wants to push all the debt to her.

It sounds like he thinks they're for her school, which is correct.  But the price paid was largely a function of his income.  What he wants to do is worse than cutting her loose at 18 and having nothing to do with her financially, in which case she would have gotten much better financial aid.  The cap on Federal undergrad loans to students is $38k, so there's no way she'd have gotten herself in this kind of debt without him.

It's amazing how much better off financially I would've been if I had moved out at 18 into my own apartment and then was responsible for paying my own way through fancy uni (since I was hellbent on that).  Instead, my parents and I were both clueless who wanted me to have the fully borrowed 4 year university experience.  Fast forward 6 years and 170k of Grad PLUS, Parent PLUS, sub and unsub Stafford loans turned into a Big 10 B.S. and ACC M.S. degree that allowed me to grab a federal statistician job in 2011 making 51k (GS-9 in DC).  The last student loan dollars were finally paid off in September of 2022.  I also had to make arrangements with my parents afterward about repaying the Parent PLUS (or a portion of it) as they were NOT financially able to make all of the payments.

But IDK, learning from that set of circumstances set my own path forward and motivation to not be totally ignorant of personal finance for myself as an adult, my potential spouse, and any potential children.  Would I have had the same fire to learn from my mistakes if I had only had to borrow 1/4 to 1/3 as much?  Hard to say!  But I feel like I was one of the luckier ones, there are so many recent grads who do not have decent paying jobs and mom and dad can be in for rude awakenings.  Sounds like daughter and dad can figure it out in this scenario.

If you move out at 18 you still have to report parents' income until you turn 23, even if they are not providing any support. If they refuse to fill out the form you are completely sol when it comes to scholarships and grants.

[BlueHouse]

180k for one person with a 70k job.

The expectation is that her income will increase over time.   

There has been no interest accruing for 3 years. So how did the balance get to 180K?

Direct costs were $45K/year.  180K was the original loan amount.  I guess that will just keep going up unless they make big payments.

Did she agree to pay this back?

yes

If so, why didn't she get her own private student loans?

I don't know.  She may have. 

Was she apprised of the interest rates being signed up for? the increasing balance as interest accrued? the amount of each loan taken out?

Yes, yes, and yes.  Did it sink in to her 17 year-old brain?  I doubt it.

[BlueHouse]

Thw Massachusetts Attorney General published a process by which to make PLUS loans eligible for the SAVE program, by using 2 consolidation steps.  This is basically a loophole, and is scheduled to close by July 2025.

That's interesting.  So if it's a state AG with a loophole for federal loans, does that mean anyone living in any state can use this process? 

[simonsez]

2) This is dependent on the relationship so hard to comment but it sounds like kind of a jerk move to take out a loan in your name for your daughter's education and then saddle her with the debt at the end when the payments come due. Was this discussed with her prior to starting a program that cost 180K and only led to a 70k income? I can't ever imagine doing this to my child particularly if I was making a high income as you state. I would tell the brother to put on his big boy pants, stop "panicking", and figure out how to cash the check his big mouth wrote 3 years ago when he said he would "help" pay for college. This is the opposite of helping if he just wants to push all the debt to her.

It sounds like he thinks they're for her school, which is correct.  But the price paid was largely a function of his income.  What he wants to do is worse than cutting her loose at 18 and having nothing to do with her financially, in which case she would have gotten much better financial aid.  The cap on Federal undergrad loans to students is $38k, so there's no way she'd have gotten herself in this kind of debt without him.

It's amazing how much better off financially I would've been if I had moved out at 18 into my own apartment and then was responsible for paying my own way through fancy uni (since I was hellbent on that).  Instead, my parents and I were both clueless who wanted me to have the fully borrowed 4 year university experience.  Fast forward 6 years and 170k of Grad PLUS, Parent PLUS, sub and unsub Stafford loans turned into a Big 10 B.S. and ACC M.S. degree that allowed me to grab a federal statistician job in 2011 making 51k (GS-9 in DC).  The last student loan dollars were finally paid off in September of 2022.  I also had to make arrangements with my parents afterward about repaying the Parent PLUS (or a portion of it) as they were NOT financially able to make all of the payments.

But IDK, learning from that set of circumstances set my own path forward and motivation to not be totally ignorant of personal finance for myself as an adult, my potential spouse, and any potential children.  Would I have had the same fire to learn from my mistakes if I had only had to borrow 1/4 to 1/3 as much?  Hard to say!  But I feel like I was one of the luckier ones, there are so many recent grads who do not have decent paying jobs and mom and dad can be in for rude awakenings.  Sounds like daughter and dad can figure it out in this scenario.

If you move out at 18 you still have to report parents' income until you turn 23, even if they are not providing any support. If they refuse to fill out the form you are completely sol when it comes to scholarships and grants.

Ok, emancipation, or whatever process would free me from the obligation to be a dependent and qualify for my own aid.

[reeshau]

Thw Massachusetts Attorney General published a process by which to make PLUS loans eligible for the SAVE program, by using 2 consolidation steps.  This is basically a loophole, and is scheduled to close by July 2025.

That's interesting.  So if it's a state AG with a loophole for federal loans, does that mean anyone living in any state can use this process?

It's a Federal program, so I don't think there would be a difference between the states.  But I really have no idea.

[Runrooster]

Ok, emancipation, or whatever process would free me from the obligation to be a dependent and qualify for my own aid.

It’s insanely diificult to remove the expectation of parental support. Unless your parents are dead or you can document severe abuse or neglect. Plus you have to have been estranged at 16, not 18. If it were easy, everyone would do it.

[Morning Glory]

Ok, emancipation, or whatever process would free me from the obligation to be a dependent and qualify for my own aid.

It’s insanely diificult to remove the expectation of parental support. Unless your parents are dead or you can document severe abuse or neglect. Plus you have to have been estranged at 16, not 18. If it were easy, everyone would do it.

I remember it used to be you had to get married,  have a child, or join the military.  And before Obama care  you were off parent's insurance at 18 unless FT student.  My brother dropped classes because he was in the hospital and the insurance tried to get out of paying. 

[Zamboni]

BlueHouse, you are a good person for trying to help your brother find options.

You've gotten some good advice on potential govt programs and other refi options.

Bottom line is that he agreed to sign the loan papers allowing her enroll somewhere that she can't afford without his contributions, and then he made a decision to kick the can down the road. Taking you at face value that she agreed privately with him to pay the PP loan off, possibly before she even turned 18, in effect he has given an absurdly large loan to someone who was absolutely not qualified to take out such a loan. He could afford it and he still can afford it . . . in fact he could pay it off in full TODAY. But rather than doing that, he may be choosing to let money become a potential problem in his relationship with his own daughter.

These are the types of choices that we all have to make.

[simonsez]

Ok, emancipation, or whatever process would free me from the obligation to be a dependent and qualify for my own aid.

It’s insanely diificult to remove the expectation of parental support. Unless your parents are dead or you can document severe abuse or neglect. Plus you have to have been estranged at 16, not 18. If it were easy, everyone would do it.

Source for requiring age 16?

I have two close friends who were emancipated during high school.  It seemed to work out for them with regard to going to college on their own.  Granted, I would not have wanted to trade childhoods or parents in both situations but it does make me wonder where the line is.

I didn't fear for my safety at home or went hungry or had parents who wouldn't support me but I'm not going to pretend that at 16-17 we got along splendidly either.  I did sleep at home but aside from that, I worked, played multiple sports, was very active at school with clubs and trips, saw extended family a ton (including my parents at gatherings but more so I'd be at my uncle's house to watch baseball/football/hockey or pump iron or my grandparents' to have a relaxed time and a snack, etc.), saw friends as much as possible, etc.  It was always on the back of my mind for Jr and Sr year of high school to just avoid being home.  No abuse or anything serious and I never attempted to run away, just my dad and I were like social/emotional enemies during this period and I didn't want anything to do with him during my waking hours.  I was already fairly independent and responsible and don't think it would've been much of a shock to be out on my own both in terms of a roof over my head and legally.  If you're saying the legal part would be hard to ascertain, I don't deny your knowledge or experience.

And honestly, say I had been emancipated and lived in my own apartment for the last year of high school and I was DENIED with the FAFSA process to be considered independent - I feel like that still would've had a good deal of value in the form of a reality check.  I could've/should've gone to the local CC for free to get an Associate's (graduates in top 25% of my HS class could go to county CC for two years for free).  Instead, my parents and I were so blind and naive to the process involving a 4 year uni and borrowing every single dollar to do it that any roadblocks might've caused us to reconsider the trajectory.

My dad and I have a much healthier relationship today but part of me does wonder if we had just been separated from each other during the latter half of high school (in addition to the early college years when I lived 2.5 hours away by car) if we could've repaired it sooner all the while being a little more financially literate and knowledgeable.  IDK, I don't hate my story per se and never would've met my wife had things at the end of HS and beginning of tertiary ed been different, but damn, it was NOT financially optimal at all and I was just so clueless and I hated that feeling of ineptitude stemming from ignorance.

Reading the other comments here - I do feel bad for the girl agreeing to things privately with her dad when she probably was not mature enough to know what she was really agreeing to be paying back.  Just like with loans in the student's name that are kinda fishy in terms of the ignorance on the side of the borrower in many cases, it's a slightly icky feeling reading about agreeing to repay Parent Plus loans as a teenager on top of loans in her own name.  Maybe I'm projecting my own naivete into it but I just wish teens and parents alike had more of a clue going into this post-HS education process on a societal level.

[Cranky]

Nor all states recognize emancipated minors, and a teenager living apart from parents risks ending up in the foster care system.

[Cassie]

That’s a huge amount of loans and really too bad her dad couldn’t say no. My youngest son was very smart and graduated high school at 16. He went to college for one semester and quit and then worked full time living at home. By 18 he moved to a different state and worked at a ski resort. At 21 he moved in with me and went to college. He was viewed as independent and was able to get student loans. This was in 2001 so things may have changed since then.

[BlueHouse]

BlueHouse, you are a good person for trying to help your brother find options.

Oh jeez.  When I read that, I realize I'm a buttinsky...again.  Hahaha!

You've gotten some good advice on potential govt programs and other refi options.

Bottom line is that he agreed to sign the loan papers allowing her enroll somewhere that she can't afford without his contributions, and then he made a decision to kick the can down the road. Taking you at face value that she agreed privately with him to pay the PP loan off, possibly before she even turned 18, in effect he has given an absurdly large loan to someone who was absolutely not qualified to take out such a loan. He could afford it and he still can afford it . . . in fact he could pay it off in full TODAY. But rather than doing that, he may be choosing to let money become a potential problem in his relationship with his own daughter.

These are the types of choices that we all have to make.

Yes to everything you've said above. 
I don't think she will ever be OVERLY burdened by this.  Her dad will pay most of it and she will pay some amount that they both feel is achievable.   It is a cloud that hangs over her, but no more (and probably less) than most people with debt.   No one in our family sees this as insurmountable or even having a terribly negative effect on anyone's way of life.  Writing that makes me realize how fortunate we've all been in our careers and our lives.  Or maybe just how out-of-touch I've become.  My niece still says how lucky she was to attend [fancy school] and has no regret at all.  No one in the family has regret more than what someone would feel with a hangover after a great party. 

So to recap, it sounds as if the options really are only SoFi or something similar to consolidate into private loans when they can get lower rates.  Other than that, just pay it off as they had planned. 

Thanks everyone on sound advice and also by sharing opinions .

[use2betrix]

I’m surprised at the amount of people speaking poorly of the father for wanting to transfer the student loans for his daughters school, to his daughter, particularly when the OP mentioned that it was an agreed upon understanding for her to pay the loans.

I “finished” my schooling with around $50k in student loans around 2009. Largely consisted of lots of failing, transferring, etc. I went to 3 community colleges, a university, and trade school, all over a 4ish year span. I only finished with an associates degree and trade school certificate.

Upon finishing my schooling, my parents gave me a very nice letter outlining every single dollar that they had spent to cover my expenses, my handful of student loans, and other accumulated debt. This also included things like times they had to pay my care insurance, cell phone bill, etc. There were also some parent plus loans in their name.

I never batted a single eye at the itemized list of money I owed them/banks. It was what we agreed to, so why would I feel entitled for anything different? Learning that level of responsibility at 21 years old was incredibly valuable for the rest of my life. It’s been 14 years, but I still have the letter and itemized photo of their checkbook outlining all the expenses. I would say that it helped build the base for a pretty decent career/savings/wealth as I continued to grow.

I have a 2 year old now. While we have plenty of money and likely will in the future, I’m not entirely sure that I plan to pay for all of her college, largely because of the lesson that personal accountability teaches at a young age.

[Zamboni]

^I'm glad you were able to pay them back since that was the agreement.

When I was in a junior in college I was thinking about taking out a student loan my senior year to help me not feel so cash strapped all of the time. I had a full-tuition scholarship but there was always some approval of guaranteed student loans for room and board type expenses in my financial aid package. I already owed over $8K from student loans in previous years, so what was a few thousand more? Peanut butter and jelly sandwiches for lunch with pasta for dinner every day was getting really old I guess. I had moved off campus to an apartment I shared with 5 people, so rent was pretty reasonable, and I had no time for entertainment so that was zero cost, but I wanted better food!

I had a part time job and I mentioned I was thinking about taking out the loan to my boss, assuring him that I was still going to keep working it was just to give me more wiggle room. He said to me "don't take out that loan . . . you are getting by fine, and a bigger set of loans will be hanging there over you head when you graduate. My wife and I are both still paying off our student loans and it is painful every month."

I'm grateful he gave me that advice and that is the same advice I am now giving my own college-aged kids . . . they are doing fine and getting by, the extra amount for "living expenses" of the loan is unneeded. One of the colleges estimates that the living expenses for a single college student sharing a room in an apartment is over $25,000! And that's not in NYC or Boston or SF or some similarly HCOL area, it's in a medium COL area. I can't make this stuff up. I spent less than that on an apartment, food, utilities, and healthcare for my entire family in the same city recently, so it's just absurd. They do it because the cost of living and dining on campus is very inflated. The financial aid offices really push those loans, though! Like, they really push them! Sheesh, do they get kickbacks or something?

[MaybeBabyMustache]

If the conversation was incredibly clear between the father & daughter, I think we've cleared one hurdle. However, I would strongly, strongly discourage my teen from taking out that big of a loan themselves, and would not be willing to take out a loan of that size for them. Not because we're not willing to invest that in their education, but because they are very young to make such a huge choice on their own, and I would not make that path easier by taking out a loan in my name, assuming we will transfer it to them. That said, the horse is out of the barn on this situation, so if they can meet in the middle where everyone feels comfortable & they are both contributing in a way that feels equitable, fair enough. I would just work hard to avoid that situation with my kids.

[use2betrix]

If the conversation was incredibly clear between the father & daughter, I think we've cleared one hurdle. However, I would strongly, strongly discourage my teen from taking out that big of a loan themselves, and would not be willing to take out a loan of that size for them. Not because we're not willing to invest that in their education, but because they are very young to make such a huge choice on their own, and I would not make that path easier by taking out a loan in my name, assuming we will transfer it to them. That said, the horse is out of the barn on this situation, so if they can meet in the middle where everyone feels comfortable & they are both contributing in a way that feels equitable, fair enough. I would just work hard to avoid that situation with my kids.

I think it’s very dependent on the degree that was obtained for 180k. A specialized medical or law degree is very different than most standard 4 year degrees. I have a friend that is a specialized MD that definitely graduated with more than 180k in loans, but also made over 300k in the first year finishing their training.

[BlueHouse]

I think it’s very dependent on the degree that was obtained for 180k. A specialized medical or law degree is very different than most standard 4 year degrees. I have a friend that is a specialized MD that definitely graduated with more than 180k in loans, but also made over 300k in the first year finishing their training.

heh heh.  Nope.  She got a degree in international relations.  She's now working in a support role at BigLaw.  I don't think there's really much of a career path when you work in support roles. 

This entire thread has really made me think quite a bit about why I have such a strong feeling that "it'll all turn out okay".  Really everyone in my family has this same mentality.   We've had some true hardships in our lives, but everything really has always turned out okay.  I'm not sure if this is a product of privilege, the times, our success, or what.  I do look back on some things that have happened in my life and think certain events could have been career-enders for other people or could have been life-changing in a detrimental way.  But nothing like that has ever happened in our family going back generations, so I wonder if I just see everything through rose-colored glasses? 
This might be a topic for another thread, but "What could be the worst thing that would happen?" 

[MaybeBabyMustache]

If the conversation was incredibly clear between the father & daughter, I think we've cleared one hurdle. However, I would strongly, strongly discourage my teen from taking out that big of a loan themselves, and would not be willing to take out a loan of that size for them. Not because we're not willing to invest that in their education, but because they are very young to make such a huge choice on their own, and I would not make that path easier by taking out a loan in my name, assuming we will transfer it to them. That said, the horse is out of the barn on this situation, so if they can meet in the middle where everyone feels comfortable & they are both contributing in a way that feels equitable, fair enough. I would just work hard to avoid that situation with my kids.

I think it’s very dependent on the degree that was obtained for 180k. A specialized medical or law degree is very different than most standard 4 year degrees. I have a friend that is a specialized MD that definitely graduated with more than 180k in loans, but also made over 300k in the first year finishing their training.

I assumed it was not a high paying/advanced degree job, as OP said she was making $75k/year

[Freedomin5]

I guess with a bachelors degree in international relations, she can potentially work for the United Nations, or for the federal government in some sort of foreign affairs role, if she wants a career path.

[BlueHouse]

I guess with a bachelors degree in international relations, she can potentially work for the United Nations, or for the federal government in some sort of foreign affairs role, if she wants a career path.

This is not likely.  My niece has led a charmed life, things tend to work out, and without real adversity, there's really no hunger.  Plum jobs like those mentioned don't just fall into people's lives. 

Also, not sure how many people realize how difficult it is to get a job with Fed Govt these days.  You must either be a recognized expert in some scientific field, or you have to join a pathways program in college or even high school.  You don't just take an exam and choose a job anymore.  :(

[Sibley]

This entire thread has really made me think quite a bit about why I have such a strong feeling that "it'll all turn out okay".  Really everyone in my family has this same mentality.   We've had some true hardships in our lives, but everything really has always turned out okay.  I'm not sure if this is a product of privilege, the times, our success, or what.  I do look back on some things that have happened in my life and think certain events could have been career-enders for other people or could have been life-changing in a detrimental way.  But nothing like that has ever happened in our family going back generations, so I wonder if I just see everything through rose-colored glasses? 
This might be a topic for another thread, but "What could be the worst thing that would happen?"

Yes, it often will turn out ok. But that doesn't mean that enduring the intervening time was necessary or ultimately beneficial.

[BlueHouse]

This entire thread has really made me think quite a bit about why I have such a strong feeling that "it'll all turn out okay".  Really everyone in my family has this same mentality.   We've had some true hardships in our lives, but everything really has always turned out okay.  I'm not sure if this is a product of privilege, the times, our success, or what.  I do look back on some things that have happened in my life and think certain events could have been career-enders for other people or could have been life-changing in a detrimental way.  But nothing like that has ever happened in our family going back generations, so I wonder if I just see everything through rose-colored glasses? 
This might be a topic for another thread, but "What could be the worst thing that would happen?"

Yes, it often will turn out ok. But that doesn't mean that enduring the intervening time was necessary or ultimately beneficial.

Good point.  There have definitely been some things that I wouldn't mind avoiding next time around!