Question for the Money Doctors
Question submitted on Feb 12, 2014.
QuestionOur son graduated from college. We have 38,000.00 in parent loans. The interest rate Sallie Mae charges we will end up paying double what we borrowed in interest. We are set up on a 10 year loan and every 2 years the payment increases by a couple hundred dollars. We will not be able to afford it. Any suggestions on a better way to pay this ?
Unfortunately, Parent Plus loans don't qualify for some of the breaks that are available to students who borrow money themselves. However, you may be able to refinance the loans through the Federal Direct Consolidation Loan Program. Under that scenario, your loan will become eligible for the break that allows repayments to be contingent on your income. With mortgage interest rates at historic lows, the better option is to take a home equity loan against any equity you have in your home. Home equity loan interest expense is tax deductible for home equity loan principal up to $100,000.
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