Reid Clark, 57, unexpectedly became the sole provider of his five children.
He took out PLUS Parent Loans to fund their education and told Insider he now has $ 550,000 in debt.
“I think I’m paying $ 3,000 a month for most of the rest of my life,” he told Insider.
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Reid clark did not expect to support five children on her own income.
Clark was preparing to pay for his five children’s education as part of a two-earner family, but he and his ex-wife divorced in 2011. A few years later when the kids started going to college , he decided to turn to federal loans to finance their studies on his own. (Due to private circumstances, his ex-wife does not contribute.)
Today, his debt is over $ 550,000.
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“I think I’m paying $ 3,000 a month for most of the rest of my life,” Clark, 57, told Insider. He believes he will have to continue making these payments for at least three decades.
Parent PLUS loans, the type of loan Clark pays, are federal loans that allow parents to pay for their children’s education. It can cover the full cost of schooling minus any financial assistance the child has already received.
For Clark, the ability to take out these loans meant he didn’t have to postpone his children’s education despite the unexpected change in his financial situation. But now, he said, even though he earns a living wage in healthcare sales, his retirement could very likely be postponed because he chose to go into debt to prioritize the future of his children.
“For those of us who want to see our children do better, we understand that you improve yourself and your chances of success through education,” said Clark. “And I’m just not going to take the risk of not sending my kids to school, even though that will create a huge financial burden. It’s not an option.”
Clark says he just wanted the best for his children, and Parent PLUS loans have allowed him to give the best to his children. But he is “very worried” about his own financial future, and he blames high interest rates and lending practices that ignore borrower’s income, or income trends.
“They make it very difficult to educate your children and pay for it”
President Joe Biden campaigned to write off $ 10,000 in student debt for each borrower, and some Democrats are urging him to write off $ 50,000 in federal student loans from each borrower using executive action. But it’s unclear whether Parent PLUS Loans would be included in that remission, and helping parents with their debt isn’t part of the conversation on Capitol Hill just yet.
Parent PLUS loans are the most expensive type of federal loan: they currently have an interest rate of 6.28% for the 2021-2022 school year, compared to 3.73% for undergraduate loans, which makes getting into debt faster for parents who need help sending their children. at school.
New data released last week by the Texas Public Policy Foundation highlighted the burden student debt places on parents, finding that there is about one parent PLUS borrower for every five student loan borrowers. Andrew Gillen, author of the report, told Yahoo Finance that one of the problems with parent PLUS loans is that since the amount parents receive is based on the cost of schooling instead of what parents receive. can actually afford, it can create a “dangerous mentality”. “which leads to uncontrolled borrowing.
It’s not like Clark’s kids go to the most expensive schools in the country. Three of them went to small schools in Pennsylvania, where Clark currently lives, and the other two went to other public schools on the east coast. But even for public universities, tuition fees have been skyrocketing for years.
Since 2001, average tuition fees in the state have increased 211%. In addition to Clark’s loans, each of his children took out about $ 20,000 in student loans because Clark wanted them to have a “vested interest” in their education.
He said his debt comes down to flaws in the federal student aid system, in which the government allows people to borrow money very easily but very difficult to pay it back.
“At the very beginning of the whole process, that’s where the problems start,” said Clark, referring to the uncontrolled amount parents can borrow years in advance. “They make it really hard to educate your kids and pay for it.”
After the federal hiatus on student loan payments is lifted in February, Clark plans to have the means to make monthly payments on his loans, but it could take decades to completely eliminate his debt, and he said that he “does not keep hope” of a student loan forgiveness all the time. soon.
“I’m very concerned about my ability to repay loans during my remaining working years, and it’s going to scare me even more in a few years when I retire, and I’ll have very limited income,” Clark said. “This is the part that gives me the most anxiety.”
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