Reid Clark, 57 years old, became unexpectedly the sole provider for his five kids.
Insider learned that he has now accumulated $550,000 debt from PLUS loans he took out to his parents.
Insider told him that he was willing to pay $3,000 per month.
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Reid Clark never imagined that he would be able to provide for five children with his income.
Clark had been planning to finance his five children's education as part of a couple with two incomes. However, he and his ex-wife split in 2011. Clark decided to take out federal loans to pay for his children's college education a few years later. His ex-wife, due to private circumstances is not contributing.
His debt load now stands at more than $550,000.
Clark, 57, said that he was willing to pay $3,000 per month for the greater part of his life. Clark estimates that he will have to continue making these payments for at least three decades.
Clark is repaying a Parent PLUS loan, which is a federal loan that allows parents to pay for their children’s education. It can pay for the entire cost of attendance, minus any financial aid that the child has already received.
Reid Clark and his five children. Reid Clark
Clark was able to borrow those loans so he wasn't forced to delay his children's education despite a sudden change in his financial situation. He said that even though he has a decent salary as a healthcare salesman, his retirement could be delayed if he takes on more debt to ensure his children's future.
Clark stated, "For those who want to see their kids succeed, we understand that education is a way to improve yourself and your chances of success." Clark said, "And I'm not going to take the risk of not sending my children to school, even if it's going be a huge financial burden. It is not an option.
Clark said he wanted the best for his children and that parent PLUS loans helped him do just that. Clark is "highly concerned" about his financial future and blames high interest rates, lending practices that don’t consider income changes, and lending practices that don’t account for income.
They make it very difficult to educate your children and pay for it.
President Joe Biden campaigned for $10,000 in student debt cancellation for all borrowers. Some Democrats are asking him to cancel $50,000 every borrower's federal student loan using executive action. It's not clear if parent PLUS loans will be included in this forgiveness. Moreover, it isn't known if helping parents with their debt has been a part of the conversations on Capitol Hill.
Parent PLUS loans are the most costly type of federal loan. They currently have a rate of 6.28% for the 2020-22 school year, as opposed to 3.73% for undergraduate loans. This allows parents to build up debt faster if they need to send their children to school.
The Texas Public Policy Foundation released new data last week that highlighted the financial burden student debt places on parents. It found that approximately one parent PLUS borrower is for every five student loan borrowers. Andrew Gillen, the author of the report, said that parent PLUS loans can cause a dangerous mentality that can lead to excessive borrowing. The amount parents receive depends on how much they can afford and not the cost of attendance.
Clark's children did not attend the most expensive schools in the nation. Clark, Clark's children, attended three small schools in Pennsylvania. The other two went on to attend schools on the East Coast. However, tuition costs at public universities have been on the rise for many years.
The average tuition in an American state has risen 211% since 2001. Clark also borrowed $20,000 for his children's student loans. Clark wanted them to be vested in their educations.
He explained that his debt is due to flaws in the federal student-aid program, which allows people to borrow money and makes it difficult to repay it.
Clark stated that "at the very beginning of the entire process is where problems begin." Clark was referring to the large amount parents can borrow for years in advance. They make it difficult to educate your children and to pay for it.
Clark expects to be able to make monthly student loan payments once the federal pause lifts in February. However, he says that completely eliminating his debt could take many decades. He also said that he isn't holding out much hope for student-loan forgiveness.
Clark stated that he is concerned about his ability to repay the loans in my remaining years of work. Clark also said that it will scare him even more when I retire and have a limited income. That's what gives me the most anxiety.