A father has sacrificed his financial freedom and incurred a debt of $550,000 because he took on student loans to ensure his five children could graduate from college.
Reid Clark, who works in healthcare sales and has raised his five kids single-handedly, revealed to the Insider that he would likely be paying off the student loans in his retirement years and for the rest of his life. Despite his financial struggles, Clark said that he does not regret taking out five Parent PLUS student loans for each of his children's college fees as he believes that "education is not an option."
The 57-year-old solo parent didn't have problems with his kids' school fees until his divorce in 2011. His ex-wife has not helped out with the children's education.
What is Parent PLUS?
Clark signed up for the federal student loan, Parent PLUS, that allows the mom or dad to pay for their kids' tuition fees. Under this scheme, the borrower will continue to pay high interest rates even if the mother or father's financial capacity has changed, as in the case of this single dad after his divorce.
Insider reported that Parent PLUS is the most expensive student loan with a current interest rate of 6.28% for the 2021-2022 school year. According to a report from the Texas Public Policy Foundation, Parent PLUS loans are computed based on the college cost and not the capacity of the parents to pay off the debts. Nearly one in five parents supporting their kids in college are under this scheme.
So, while Clark's children didn't attend expensive colleges, their father will have to bear the high cost of student loans interest rates. His five children started with a $20,000 student loan each, but this has ballooned because of the interest rates.
Student Loan Forgiveness
Meanwhile, months into the Biden administration and the campaign promise for student loan forgiveness has yet to materialize. According to reports, President Joe Biden wants to cancel $10,000 per borrower's debt, down from the initial $50,000 proposal during the elections.
However, the plan has not moved in Congress as many of the president's allies are not in favor of cutting down student loans as it will cost the government between $1.5 to $1.7 trillion. While the president could also issue an executive order if Congress doesn't budge, this could be challenged in court, delaying its execution further.
The cancellation of student loans by as much as $10,000 would mean that a third of the borrowers might acquire zero balances or about 15 million Americans. If the leaders agree that loan forgiveness should be $50,000 per borrower, 36 million will benefit from the scheme.
Payments for student loans are on pause until January 2022 due to the pandemic and as the officials deliberate on signing the plan into law. In August, Biden has approved forgiveness for at least 323,000 borrowers with permanent disabilities.
Related Article: Student Loan Relief Extended, but Scams on the Rise
© 2021 ParentHerald.com All rights reserved. Do not reproduce without permission.