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Parent Plus Loans and In-laws
My husband's parents have really outdone themselves this time. Here goes ...
When DH went to college his parents told him that he would need to take out student loans to pay for his education and that he would be responsible for paying back those student loans. This was thoroughly understood. However, his mother took out additional 'parent plus loans'. She told him repeatedly that this was her contribution to his education. Fast forward to present time ... two parent plus loans that she apparently forgot she took out came to her for payback. She had decided to defer these payments until he graduated and let the 8.5 interest rate accrue over the 5 year period. She has been paying back one of the parent plus loans, but when these came she called us over and said that we needed to pay these back ($19,000) because it was for his education and she can't handle it. First his parents told us that we needed to find a way to take over the loan. This is impossible because Parent Plus Loans cannot be transferred. After that they told us that we needed to take out a private loan (which happens to have a giant interest rate because it is unsecured) and give them that money so they can pay off the plus loans. We would then pay off the private loan.
DH and I discussed this and agreed that the debt is not ours to pay back. Taking out a private loan for this would ruin our chances of taking out a home or vehicle loan within the next few years. Also, because his mom repeatedly claimed this was her gift to him we feel little obligation. It is like she promised help and now that it is time to cash in on that promise she decided it is too much and wants to backpedal.We are newlyweds and I am still in college so even if we wanted to we could not take this loan on. However, despite us feeling like this is not our responsibility we told them that we would reevaluate our financial situation and throw them money towards the loan when we could.
His parents think that we are robbing them. His mom is lying and saying that she never said that the parent plus loans were her contribution. I was privy to the conversation on more than one occasion and know what I heard.....anyway, she has sense blocked us on facebook (mature, right) and won't take our calls to discuss things further. His father will talk to us about transfering out of their family phone plan...but that's it... We feel so bad and fear that his parent's my completely ostracize us from the family for good....but what more can we do? ... just because they bit off more than they can chew (even though it was for DH's benefit) doesn't mean that we can sign a financial death sentence to make them happy.
What do you all think? This is such a hard situation.
Re: Parent Plus Loans and In-laws
1. Immediately opt out of any family phone plan that you benefit from financially. Even if it doesn't "cost" them to have you on the plan, separate. If you want to be separate individuals with your own financial goals and plans, then you need to act like it.
2. Opt out of any other co-mingling of finances.
3. Do not pay for the loan. That's ridiculous.
4. If they put the price of their relationship at $19K, so be it. You will see how much they think they are worth. If you want their love and attention, pay them money. But realize it is bought and paid for.
Ditto all of this, and especially #4.
Write a nice letter explaining that while your DH certainly appreciates their contributions to his education, those contributions were just that. Not loans to be collected on later. Just as they appear to have lost trust in you for not "paying them back," so have you lost trust in them since they're trying to collect on what was clearly an optional gift.
Sever all ties for now. As evil and manipulative as it sounds, they'll come around when you have kids. Of course it will be your choice as to whether you want them in your life at that time.
Sorry you're going through this
I agree with you, and the others. This is not your debt to pay.
Get off their phone plan, and keep your distance. I am sorry that you are going through this, and I am sorry for your H because I am sure it's not easy on him either.
I have a couple of questions:
1.) how much student loan do you currently have? Stafford, SLS?
2.) how much of the Parent Plus loans did your husband get? My dad took out a supplemental loan when I was in school (back in the day) and gave the money to me. I made the payments (a whopping $60 a month) but it was in his name.
Honestly, if your husband understood that he was responsible for paying back *all* of the loans taken out to pay for his education AND if they took out the loan and turned the money over to him, yeah, I am going to say he is on the hook.
Now, obviously refinancing the loan is not viable. You guys should figure out what the monthly payments are and make them. Set up automatic payments and take them off her plate. Yes, it sucks that she let the interest accrue, but it is what it is. When she whines that it is still in her name, tell her that there is nothing *reasonable* that can be done about that, but that you will make the payments for her.
So sorry for your situation. Believe it or not im dealing with "almost" the same thing.
Parent Plus Loan, mom doesnt want to/cant pay anymore, and I could not transfer the loan. So I am stuck paying through the website for my mom with no tax bebefit, ugggggggg.
For some reason I noticed people or my mother seem to think b/c you just got married that you have a ton of money!!?? uh, how do they think you paid for it? and that it just replenishes itself?
1) between the two of us we are about $90,000 in debt solely from school loans
2) they took out the $19,000 over the 5 years of his education and he received all of it .
The issue here is that he was told that the loans that she took out was her contribution to his education and wouldn't have to be paid back. It was understood that the loans that were in his name he would have to pay back without help from them. The loan payments are large (about $300 a month) and we simply cannot pay them for her...nor did we expect to because it was given to him with the stipulation that it in fact did not have to be paid back...that she was handling that... except now she is lying and saying that she never said that because she is a .... let's not get into that.
Besides all of this and against my better judgment we did tell them that we would send money when we could (I am still in school and we have other bills and students loans which we are responsible for) ... but that just wasn't good enough .....
If her DH never agreed to the loans being taken out and they are not in his name he is not responsible for them. Obviously he knew he was responsible for the loans he took out, and made his decisions based on that. If his mother didn't think that was "good enough" or what ever logic she used to take out the Parent Plus loans that is on her.
I would not be paying a penny to a loan I did not make the decision to take out,
I wouldn't pay her anything.... and frankly I think it is horrible that she is wanting to do this now and making you all out to the back guys. HER NAME IS ON THAT LOAN = HER RESPONSIBILITY. This was NOT a student loan plus.... this was a PARENT LOAN PLUS.
Your H had no say in how much she took out... nor did he have any understanding that HE would have to pay back the 19 grand.... HE DID NOT SIGN or READ or have COPIES of those papers.
Not to continue worrying you or anything... I would suggest running a credit check on your H to make sure his parents didn't take out any cards or loans in his name. Just to be on the safe side I would do this.
Please don't transfer that loan into a private loan...
Sara, Friend?
glove slap. I don't take crap.
Does she not want to, or can't she? There's a huge difference IMO.
I personally would take over the loan. I think that's a better move then them being able to use it on me in the future to help them in their retirement years. It just sounds like they can't really afford the loan and have nothing stashed for retirement.
Also, there may have been some miscommunication involved on the loan. Contribution can also mean just taking out the loan with no intention of paying it and your DH still responsible to pay it off. There are limits on how much a student can borrow.
IF that was the case it.... there are Alternative Student Loans..... My Point is HE DID NOT GET TO READ ANY OF THE PAPER WORK for that loan..... HE DIDN'T SIGN the dotted line.
Also I am going to reiterate that He get a credit monitor for the next couple of years in case his parents take out a card in his name and transfer the dept. to that credit card.
Sara, Friend?
glove slap. I don't take crap.
When I went to school my dad explained that he just could not pay for it in any way and that I was going to have to get grants, scholarships and loans to pay for it myself. Then he was done with it- he never took out extra loans in his name to help me out because he was very clear about the fact that he was not in a position to go into debt to pay for my education.
Your H's mom told him he'd have to take out loans to pay for his education- she should have left it at that. The extra loans are in her name no matter who they benefit. If she wasn't willing or able to pay those loans back, she never should have taken them out. That's exactly what any responsible parent would say to their child that got themselves into credit problems/debt.
An American Girl's Travels
Isn't taking out a loan with no intention of paying it back fraud? No one but the person who took out the loan is legally responsible to pay it back in the eyes of the financial institution.
An American Girl's Travels
That is what I thought.... and people who do that kind of stuff are the same type of people who take out credit cards in their kid's names.... which is why I suggested that he get his credit activity monitored for the next year or two in case his parents try something funny.... err illegal.
Sara, Friend?
glove slap. I don't take crap.
This. My parents made it very clear to my brother and I that they were unable to help pay for college, and that we would be responsible for all of it. My brother ended up paying for most of his in loans that he is now repaying for a long time to come. I chose to work full time and go to school part time my first 2 years, so I only had to take out loans for the second half, but I still know I have to pay them all back myself. DH doesn't have any student loans (he was able to pay for it with grants, scholarships, working tons), but he knows that paying off my student loans is top priority right now in order to get a house in the next couple years.
Another vote for this.
Also, if they want to shut you guys out for a loan THEY took out, then I would let them do it. Like pp said, if its not this it will be something else.
Get off their cell plan, and wash your hands of any financial ties you have w/ them. Don't pay them a dime for those loans b/c they are NOT you or your H's responsibility.
I also like the point one of the pp said that if your love is worth $19K to them, then its best you walk away b/c you will always be paying for it.
You absolutely should NOT make any payments to them! From a legal standpoint, the second you pay anything is an admission of financial responsibility. Don't do it.
Dup- stupid nest
The questions that come to my mind, if he did not receive the $19,000 would he still have been able to finish school and earn his degree? If not, would he have been able to take out additional student loans in his name to meet expenses? Did she ever explain the reason she took out those Parent Plus Loans?
On one hand, I believe that since he received it and used it, it was an educational expense he should pay. But, I would be pushing back really hard on my mother. I would have asked her why she told me it was her contribution (meaning a gift) to my education. And what has changed since then that she now determines it is a loan I'm responsible for?
If she had a reasonable conversation with me, being honest about her situation or admitting she was in over her head, I might have been willing to discuss sharing the payments such as interest vs. principle, or some such thing.
But you're missing the point, neither couple can afford to pay it right now, so why should the son be forced to find a way to take on a debt he didn't agree to? Mom took out the loan with the intention of paying it back herself. She had years in which to do this, never once asking for money. Now that the debt has ballooned with interest, she claims it's his problem. What she is trying to do is very wrong, and he and his wife should have absolutely no liability for her poor decision-making. Mom knows this or should wouldn't be so defensive and b!tchy about the whole thing. if they stand their ground, she will have to make a payment agrrangement with her creditor that works with her budget. End of story.
Actually you would not be responsible for debts in their name after they died. That debt would be paid out of their estate.
And his parents are the ones letting money get in the way.
I mean who drops a 19 thousand dollar plus debt that is in their names on a pair of newly weds.... one of which is still in school... who are their children and are basically saying pay it or we cut you out of our lives.... ?
Sara, Friend?
glove slap. I don't take crap.
This just happened to my sister and BIL. His mom apparently took out a parent plus loan and no one (not even the dad, I think) knew about it. Well, push comes to shove and they're having a hard time making ends meat and BIL's dad came over and dropped the bomb on them. I can't remember how much it was exactly but no interest had been paid. They're paying it back even though it's in the mom's name.
It's a tough situation all around. If you have the option to not pay it back and don't want a relationship with them then don't pay it. It sounds like the mom was at fault even though it was used to help your DH out in college.
Similar situation here too.
DH parents took out loans in their names, in addition to the one DH took, to pay for college. At 17 , heading off to college he said "when I graduate & start working I'll pay you back", they responded Don't worry about it, we'll deal with that when the time comes.
Fast forward to me & DH a couple years out of college & newlywed. His parent bring up the loans they took out for the first time since college. They "can't" afford to pay it, so we need to start paying it. "After all, son you promised you would and it was for your education." They had refinanced and put it on deferrment, significantly increasing the balance for its original amount. The interest rate is way higher than any of our other student loans. And they tell us the monlthy payment is one thing, but when we get the payment coupon book we find it's actually $100 a month higher and due to jump another $100 in a year as part of the deferment.
We are paying, because he feel honor bound to do so since it was for his benefit and (at age 17) he said he would.
One thing that irks me is that they let thousand of dollars of interest and fees accrue without (I am assuming) any intention of paying, and without talking to him/us about it first, since they seemed to know they would call on him to pay it eventually. If they had said earlier "We can't pay this now. It's either deferment or you pick up the payment now", at least we would have been a part of that decision & maybe not deferred & maybe saved some interest.
What really frustrates me most though is their claim that they "can't" pay. They can't afford the student loan they took out, but somehow they can afford a Porsche, a Mercedes, a pool, numerous motorcycles, and cable TV. That really bothers me.