After paying off $96,000 in student loans over the past eight years, Sarah from Philadelphia thought she was finally done. She had faithfully paid back both her personal loan and the $50,000 her parents took out under a Parent Undergraduate Student Loan to help finance her education.
‘I Did My Part’
At 29, Sarah told her parents she planned to make her last few payments and close the chapter on student debt. But instead of celebrating, her parents dropped a bombshell: they had consolidated the Parent PLUS loan taken out for her and her siblings into one big loan. Her monthly payments, it turned out, were covering not only her share, but everyone else’s as well.
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“They kind of dropped the bomb, like, ‘Oh, well, this happened… to lower our payments,'” Sarah told personal finance experts Dave Ramsey and Rachel Cruze on “The Ramsey Show.”
Ramsey quickly jumped in. “No, no, no,” he said. “You have not made an obligation to pay your brother’s share. You have made a promise to pay your share.”
Sarah explained that she had been paying her parents $1,000 a month for almost eight years – money she believed was going towards her portion of the $60,000 Parent PLUS loan. But with her parents combining everything into one pot, she was suddenly on the hook for a loan that was never hers.
Ramsey encouraged her to take a hard look at the numbers. “We are talking about 96 months that you paid $ 96,000, including 7% interest,” he said. “That means I don’t owe you anymore. I’m sorry, mom and dad. The rest is up to you and my brother. I’ve done my part.”
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Ramsey said many parents who co-sign student loans never get a dime back. In this case, Sarah went above and beyond. “They’re very lucky, honestly, as Parent PLUS holders, that Sarah actually paid $96,000,” Ramsey said. “Ninety percent of the time I get this call, it’s the parent scrambling because the kid never paid a dime.”
Sarah acknowledged that confronting her parents could be difficult, especially since they had supported her in other ways growing up. “They changed your diaper, but you don’t have to pay them for that,” he said. “It’s called being a parent.”
Ramsey was sympathetic, but firm: she had fulfilled her moral and financial obligations. The next step? Use an online loan calculator to do the math and show her parents in black and white that she paid what she promised.
“This is a mess they made,” Ramsey said.
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This article She Approved $96,000 in student loans on her own, then her parents asked her to pay off her siblings’ debt as well. Dave Ramsey Says, ‘No, No, No’ originally appeared on Benzinga.com
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