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Loans by parents for their child’s college education
How many parents knew they could apply for a Federal loan to pay for their Student’s college education? The loan is called a Parent Plus Loan, and the interest rate is 7.54% and remains at that interest rate for the duration of the loan. Two-parent families (mother and father) can apply for a loan for the same Student for the same year. Parent Plus loans are also available for more than one Student, in the family, in the same year.
Biden’s Student Forgiveness Loan will not only help to reduce the amount of debt the Student owes, but it will also reduce the amount of debt the Parent owes. The same rule applies; the income must be less than $125,000 (or $250,000 per family) to have the debt forgiven.
This Student Loan debt forgiveness doesn’t happen automatically; students and parents must complete the necessary forms. Per the Washington Post, arrangements will be made available in October 2022.
Who is going to pay that bill? Biden’s program includes the Student and the Parent Plus Loan, but someone must pay the bill. Per the Forbes Advisor, this aid will eventually cost the Federal Government billions of dollars. Over the next ten years, an estimated $519 billion could be added to the National Debt.
Realistically, suppose a family has a Student Loan (available for up to $10,000 forgiveness), a Pell Grant (available for up to $20,000 forgiveness), and both parents obtained Parent Plus Loans (available for $10,000 each) for one Student. In that case, that family could expect to receive as much as $50,000 in the proposed Biden Student Loan Forgiveness program.
