2 Parent PLUS Consolidation Options You Didn't Know About | Student Loan Planner

Here are two Parent PLUS consolidation options you might have not known that you have. The first is Consolidation through Uncle Sam. This allows you to consolidate your Parent PLUS loans all into one Direct Consolidation loan, which will still remain under your name. This new Direct Consolidation loan is eligible to be paid back under the Income Contingent Repayment Program. This is a program that will take 10% of your income after they withdraw, after they give you a deduction of 100% of the federal poverty line from your income. Hence, if you make $50,000 and you're deducting $12,000 for the poverty line and you have $38,000 left, they would take 20% of $38,000 or $7,600. Over 12 months, that will be a little over $600 a month. Now, that $600 a month payment might be quite a lot if you have less than $60,000 of student loan debt for your child's school because it would just make sense to sign up for a 10-year payment program and just pay it back that way instead. However, recently I spoke with a mother who had $400,000 of Parent PLUS loans. In that case, she would have to pay $4,000 a month to be able to cover that debt over a 10-year time frame, and that wasn't realistic. Unfortunately, Parent PLUS loans are not capped. It's an unlimited borrowing amount that you can take out, which means that you're not able to protect yourself with underwriting standards. With that amount of debt, it would make absolute sense to do an income contingent repayment program with a direct consolidation with the government, not a private lender. On the flip side, the second kind of consolidation for Parent PLUS loans is with a private lender. There are two kinds of refinancing that you can do with a private lender if you have Parent PLUS loans. The first is basically doing a refinance into your child's name. Two popular lenders that do this are Common Bond and Laurel Road. If you go to our site, studentloanplanner.com forward slash refi, R-E-F-I, you'll actually see those lenders listed and you'll get a cash bonus if you go through, only if you go through our link. If you just apply directly, you don't get it, so it would make sense to get several hundred dollars in cash for getting a lower interest rate, and if you want that, you have to go to that studentloanplanner.com forward slash refi link. Now the other path is to just refinance the debt into your name directly. So those are the two kinds of consolidation options. The refinance again into your debt, into your name directly rather, that is basically saying, you know, I just want to pay this back. I'm viewing this as my responsibility instead of my child's responsibility, and then you can just refinance the Parent PLUS loan into your name and then try to pay it back, hopefully in under 10 years if you choose that path. So the two consolidation options, again just to recap, consolidating with the federal government with a direct loan, that is good if you owe a massive amount of debt from your children's education, usually multiple children's is when we see debt amounts that really justify a direct consolidation with the government, and then the other consolidation option is with the private lender, and you can do that either in your child's name or in your name. I'm Travis, and I really want to thank you for watching the video. If you have a question, reach out to help at studentloanplanner.com. One of our CFPs will be in touch with you. Thanks so much.