Student Loan Repayment Strategies For Urban Planners: Managing Debt In City Development

Student Loan Repayment Strategies For Urban Planners: Managing Debt In City Development – Summary Parent PLUS Planning Options Student Loan Borrowers Versus Parent PLUS Borrower Decisions Direct Loan Consolidation Additional Options for Parent Lenders Advantages of Federal (Non-Parent PLUS) Loans How the two consolidation processes bring everything together to the borrower’s advantage. Process Phase 1: Consolidation Loan Matters for Direct PLUS Consolidation Loans – Process and Forms Phase 2: Consolidation Phase Direct Consolidation Loans Phase 1 – Process and Forms (More than Stage 1, with Minor Differences) Additional Strategies for Getting a Parent PLUS Loan. double consolidation process

When advising clients on student loan issues, many financial advisors may have in mind graduates who are looking for advice on how to successfully pay off their balances. However, the number of federal student loan borrowers over the age of 50 has increased significantly over the past 20 years, and many of these borrowers have parent PLUS loans that were used to finance their children’s college education.

Student Loan Repayment Strategies For Urban Planners: Managing Debt In City Development

Federal Direct Loan students are eligible for a variety of income management (IDR) plans – including the newly introduced Educational Savings Plan – which can significantly reduce required monthly payments compared to the standard repayment option. (depending on the borrower’s income) IDR plans with Parent PLUS loans are much more restrictive and often feature much higher monthly loan payments. This not only reduces parents’ current cash flow, but also limits their ability to save for retirement.

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However, Parent PLUS borrowers (and their advisors) using the “Dual Consolidation” lending strategy have access to generous IDR plans (through July 1, 2025). With this option, the parent borrower first consolidates the existing Parent PLUS Loans into 2 Direct Consolidation Loans and then consolidates the 2 Direct Consolidation Loans into a new Direct Consolidation Loan. The resulting loan will be eligible for cheaper IDR plans, including a savings plan that would otherwise not be available to people with Parental PLUS loans. Importantly, while the process may seem relatively simple at first glance, the multi-step process must be completed carefully and completely to ensure that a direct consolidation loan meets the IDR’s preferred options.

Especially as the July 2025 deadline approaches and it is important that both consolidation processes are completed accurately and on time (which involves a lot of paperwork and can take a total of 3-6 months), advisors play a key role in helping clients navigate Parent PLUS Loan loans by each of them. can play a role. stage of the process. Additionally, advisors help clients who have completed the process choose the best IDR option for their situation and take steps to reduce required payments, from filing separately (for married couples) to finding ways to lower the borrower’s adjusted gross income. .

Ultimately, the bottom line is that as more people age 50 and older take out student loans, financial advisors may encounter an increasing number of clients trying to repay their children’s education loans. save to your account. retirement However, for clients who currently have Parent PLUS loans (or who have such loans and can complete the consolidation process by July 2025), advisors can add significant value through a dual consolidation process, which can be effective. Help save your child’s education so you can pursue other important financial goals!

Eric Kroll is a pay-as-you-go financing and student loan specialist who helps people over 50 repay their student loans. He founded Hilltop Financial Advisors by following the “traditional” path of financial planning and investment management in the Milwaukee financial industry and is passionate about helping people overcome debt, obtain student loan debt relief, and build smart financial systems. their deepest values. He specializes in student loans and has advised on over $5 million in student debt. He has created over 50 student loans after hearing the stories of older students in their 50s, 60s and even 70s. By understanding every federal student loan forgiveness and aid program described in the book, he developed a system that combined these strategies with Hilltop’s full-service model to help his clients over age 50 achieve retirement security. His job is to help people on the board

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Student loan planning is complicated. This complexity can have devastating financial consequences, which can cause a lot of confusion for borrowers, but it can also create greater flexibility and opportunities for borrowers who know how to navigate the student loan and payment systems.

Nowhere in student loan planning is this more true than with Parent PLUS loans. Parent PLUS loans are loans used to pay for a dependent child’s college education (less the amount of child support, including federal college loans). And because the amount a student can borrow with a federal Direct Loan is limited, parents often help their children finance additional expenses with Parent PLUS loans.

Other eligibility requirements for these loans are generally lenient: unless the parent company has a poor credit history (essentially no delinquencies, defaults, or bankruptcy), the parent company usually qualifies. Importantly, these loans are granted only in the name of the parents. Although most families can enter into verbal agreements requiring repayment of the loan from the child’s parent, the child receiving the loan has no legal obligation to repay the Parent PLUS Loan.

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