Robert Pemberton (64) has $265,000 in loans to pay for his children's educations.
Insider was told by Pemberton that paying off these debts is limiting his retirement.
Although he doesn't regret taking out loans, he felt it was too easy to accumulate all of the debt.
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Robert Pemberton was amazed at how easy it was to get loans to send his children to school.
Pemberton had a six-figure income when his son and daughter started college in 2005 and 2006. However, a company merger changed his financial position and he was forced to borrow $25,000 per semester to pay for their education. Pemberton was fired shortly after taking out his first loan. Surprised, the government continued to let him borrow money even though he did not have a job.
Pemberton now has $265,000 in debt. He makes a decent salary as a senior programme manager for a computer manufacturer. However, his debt became overwhelming during a time of unemployment after his children graduated and while his wife was fighting cancer.
Insider reported that the loan cannot be paid off unless there is a windfall or death. "I don’t know if it will be possible to work into my 80s."
Robert Pemberton. Robert Pemberton
Pemberton's Parent PLUS loan is a federal loan that allows parents to pay for their children’s education. They can pay the entire cost of attendance, minus any financial aid that the child has already received. PLUS loans have the highest interest rates and are the most costly type of loan.
Pemberton had approximately $30,000 in student loans for his children. However, PLUS loans are more difficult for parents than typical student loan borrowers to make their payments. Parents with these loans are not included in the national debate about cancelling student debt.
He stated that he didn't regret taking out loans but that he wished the terms of what he was getting into had been made clear.
Pemberton stated, "I don’t regret taking them but I regret not being more attentive." "I was determined to help my children get through school and get them on the right track to their futures."
"When the bottom falls out, there is no help. Lenders just want money."
After his children graduated from high school, Pemberton was unemployed for three more years. His wife, who was fighting cancer, was also unemployed. FedLoan Servicing allowed him to delay his payments until he got a job.
Pemberton was not able to get the relief he hoped for, even though his payments were stopped. The interest continued to mount, and PLUS loans now have a rate of 6.28% for 2021-22 school years, as opposed to 3.73% for undergraduate loans.
Pemberton stated that FedLoan didn't make it clear that it would not collect his monthly payments but it would still charge him around $35 per day in interest. FedLoan announced recently that it would be closing down at the end this year. Richard Cordray, an Education Department official and long-time Elizabeth Warren ally, stated that servicers would be shutting down instead of facing increased federal oversight for the same misleading practices Pemberton experienced.
PLUS loans are based upon cost of attendance so parents can borrow money without regard to their income. This makes it easy for parents such as Pemberton not to know what they're getting themselves into and make unchecked debt. Pemberton described it as "on autopilot," with all he had done was sign a paper.
He used his pension and retirement funds to pay his wife's medical expenses. Then he tried to pay his basic needs with his $10 an hour job, as well as the help of his church. He applied for jobs every day as he sat in the hospital with his wife.
Pemberton stated, "I woke up every morning and dressed as if I was going to work. I then sat down at the computer for six to seven hours per day and read job boards for almost three years." It wasn't as if I was lazy. When the bottom falls out, there is no help. Lenders just want money.
Pemberton doesn't know when he will be retiring and wishes PLUS loans were included in the wider student-loan cancellation conversation. PLUS loans have not been mentioned by Democrats in their calls to cancel $50,000 of student debt per borrower.
"What about those who send their children to school?" Pemberton stated. "I wish that I could find an investment, lottery, or just pay it off and be done."