Parents With Student Debt Want A Do-Over | Personal Finance

“Everybody wants to do everything they can for their kids; there’s a natural inclination to give your kids what they want, ”says Nancy Goodman, founder and executive director of College Money Matters, a nonprofit organization that helps families make college decisions. “Many parents have also bought into the notion that a college degree is a golden ticket. While yes, historically that’s definitely been true, it is not true for every kid in every situation and in every major. ”

Parents are expecting help from their kids

When you compare the interest rates and fees of student loans, it’s better for students to borrow federal undergraduate loans than it is for parents to take on PLUS debt, says Sandy Baum, nonresident senior fellow for the Center on Education Data and Policy at the Urban Institute and Professor Emeritus of Economics at Skidmore College in Saratoga Springs, New York.

But experts say that parents often see loans as the only way their child can afford college, and some parents expect their child will eventually bear the responsibility of payments. According to the survey, 22% of parent PLUS borrowers say they thought their children would take over their loan payments, but they have not yet.

Legally, parents can not hand their debt to their child that easily. The only way to do that is by refinancing with a private lender and transferring ownership to their child, which some lenders allow. But if the child borrows the maximum amount available, Baum says, the idea that they’ll be able to repay all that and more once they graduate “seems questionable.”

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