Here’s an interesting question from a reader, and I would love to know your thoughts:
I grew up in a lower-middle-class suburb of a big city, where my father worked in consulting for most of my childhood. We had a very comfortable lifestyle, and my parents became accustomed to living like money grew on trees. They built a huge house and with a sizable mortgage, emptied out their life savings finishing the basement, bought new cars, etc. My father lost his job, was unemployed for two years, and then took a position in education at half his previous salary, but my parents continued to live as though they were still very well-off. The two of them went to significant lengths to hide their financial troubles from my sister and me.
While I was in the middle of college, my dad went through another period of unemployment, and my parents split up in a very nasty divorce. In total, they spent about $150k on attorneys (Money that they did not have; both of them took out loans to pay for the process), and now are saddled with the remainder of the mortgage on their house, car payments, and huge loans from the divorce. They will no longer speak to each other, which makes coordination between the three of us complicated.
Here’s where the situation gets complicated. I took on some student loans for college, and my parents also took out loans to help me pay for college. I currently have $40,000 in student loan debt. My parents owe $45,000 in Parent PLUS loans for my education. These PLUS loans are in their name.
My mom has maintained that I shouldn’t have to pay anything on the PLUS loan because it was their gift for me to go to school. My dad, on the other hand, has repeatedly told me that I have to pay these loans. He says they are ruining his credit score and he can’t afford to pay them. Remember, he also still has his house, a car that he can’t afford, and lives well above his means.
If I don’t pay back these PLUS loans, I worry that my dad might not ever speak to me again. But if I do try to pay back the loans, it will cost me $500 per month which I can’t use to save for my own future. To make matters worse, if I did try to pay down the loans, my mom would be furious and said she will go after my dad for even more money.
What should I do?
This is a tough situation. I’m going to chime in later today in the comments and have already shared my response privately. But readers, what would you do in this situation?
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.