Even though he went to school for economics, George Botelho still finds the student loan process strange.
He didn't think he'd have to pay more than $273,000 in federal loans after his children graduated from college.
"With the income that I made, it was the only way he was going to college," he told Insider about his son, who attended the Berklee College of Music and now works as a music producer His daughter is employed at a laboratory. His debt was verified by an Insider.
Botelho emptied his savings account to pay for his son's first year of college because his children weren't eligible for much federal aid. Botelho consolidated the loans under his name so that they wouldn't affect their credit.
He thought he had a handle on the situation. I should have kept it in my children's names.
Parent PLUS loans are federal loans that parents can use to pay for their child's education. The cost of attendance at their child's school, minus financial aid, is the basis for the total amount of the loan. The highest interest rate on PLUS loans is 7.54%, compared with 4.99% for undergraduate loans, which means that debt accumulates quicker for families.
It's not clear if parents' PLUS loans will be part of Biden's plan for student loan borrowers making under $150,000.
Botelho was approved for loan forgiveness because of his work for the FAA. After 120 monthly payments under a repayment plan, eligible borrowers will be forgiven their loans. 98% of applicants were rejected due to the program being flawed.
Botelho said that between those monthly payments and weekly alimony payments, it's hard for him to make ends meet. Three years ago, he moved down to his basement and started renting out his house on the platform.
He said it made it easier to pay alimony. There are a lot of repeat customers.
Botelho is paying alimony to his ex- wife. He pays a company called Platinum Debt Service to make his student loan payments. His take- home pay is more than a third of what he makes, so he has to pay alimony and student loans. Expenses for repairs and upkeep limit his profits. The numbers were verified by an Insider.
He said that he had to live in his basement because he couldn't afford a car because of his debts.
He said the hold on student loan payments was helpful, but he opted out of non-payments very quickly. He didn't want to prolong his debt further because he wanted to hit 120 monthly payments. Those payments are not easy to understand.
He said that the next calculation would be the end of him.
Botelho said that he felt stuck in a federal loan. He has the option to lower his interest rate with a private company, but he doesn't want to endanger his government loan.
He said he could go into forbearance if things went bad. In most cases, interest accrues when you stop making payments during forbearance. Private lenders can't always guarantee that you'll be able to enter forbearance.
He wants the federal government to consider debt relief for people who make alimony or child support payments.
He said it was his duty as a parent to give his children a college education. Even if it's in the form of alimony consideration, I would like some form of relief in the Biden's student loan forgiveness plan. Income based monthly payments will be based on a realistic determination of what a parent can afford.
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