Parent Student Loans Survey: How Do They Affect Parents and Their Debt?

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Three in 5 parents with children heading to college said they expect to help their kids repay student loans, according to a Discover Student Loans survey.

In fact, many parents of adult children are already doing so. Some are making payments on student loans for parents, such as Parent PLUS Loans, which they borrowed to help pay for their children’s education. Others are repaying student loans they cosigned.

But how do these student loan payments impact parents’ financial situations? Student Loan Hero recently surveyed parents who took out or cosigned loans for their children’s education to find out.

55 percent of parents have more than $40,000 in student debt

The survey collected responses from parents who are repaying student loans they borrowed to pay for a child’s education and for which they are legally responsible. These loans include both student loans for parents and student loans parents cosigned with a child.

Among the parents surveyed, total student debt is high. Here’s a breakdown of their student loan balances, including both debt they took on for their own education and student loans they used to pay for their children’s education:

  • 23 percent have more than $50,000 in student loan debt.
  • 32 percent have more than $40,000 in student loan debt.
  • 43 percent have more than $30,000 in student loan debt.

Over half (55 percent) of parents surveyed reported a combined balance of more than $40,000 between parent student loans and other student loans. This significant financial burden can hold parents back as they working toward other financial goals, such as saving for retirement.

Almost 2 in 5 parents repay student debt alone

The survey also asked parents how often their children contribute payments toward the student loans borrowed to fund their education. Here’s how they responded:

  • 39 percent — almost 2 in 5 parents — said their children never contribute to student loan repayment.
  • 20 percent said their children sometimes contribute to student loan repayment.
  • 41 percent said their children always contribute to student loan repayment.

Altogether, 59 percent of parents who cosigned student loans or borrowed parent student loans to finance a child’s college degree said they pay some or all of the student loan debt they incurred.

While parents are legally responsible for student loans they take out or cosign, many families have informal agreements about who is responsible for repaying student loans.

It’s not uncommon for parents to take out student loans for parents or cosign student loans a child agrees to repay. However, many parents ultimately are stuck repaying those student loans on their own.

Parents: Discuss a plan for your child to take over student loans

When it comes to shared student debt, parents should keep an open dialogue with the child about who is responsible for repaying it.

Perhaps a child has difficulty repaying their student loans because of low income or high costs of living. Parents can help their child find strategies to create more room in their budget to help with repayment.

Once a child can afford to take over payments, even partially, parents can work with them to make a plan for a complete takeover in the future. Perhaps the adult child can cover 25 percent of monthly payments to start and then bump up contributions until they are paying the full monthly payment amount.

Parents and their adult children also should discuss refinancing. If the child is repaying the student loans, refinancing with the right lender can change who holds the loans to reflect that fact. Some lenders, such as CommonBond, allow a child to refinance Parent PLUS Loans or private parent student loans into their own name.

A child also can refinance cosigned private student loans to remove a parent as a cosigner. Some lenders offer cosigner release, which can remove the cosigner so the primary borrower becomes the sole owner of the debt.

27 percent of parents used retirement savings to cover student loans

Among the parents surveyed, nearly 3 in 10 (27 percent) said they’d withdrawn from retirement savings to help cover student loan payments.

student loans for parents

A similar percentage of parents — 24 percent — said they’d considered using retirement savings to pay student debt.

That means student loans for parents do, in fact, harm retirement planning for parents. Plus, early withdrawals often incur costly penalties that can waste some of a parent’s retirement savings.

Even if a parent manages to replace those funds, they lose out on the time those savings could have earned gains and compounding interest.

How to boost a retirement fund’s recovery from parent student loans

Borrowers who have withdrawn from their retirement accounts to repay student loans for parents need to play catch-up to get back on track.

First and foremost, get your parent student loans under control so you can avoid any need to tap into your retirement funds in the future:

  • If you’re struggling with Parent PLUS Loans, consider applying for an income-driven repayment (IDR) plan to lower your monthly payments.
  • Try refinancing student debt that’s in your name. Whether you have Parent PLUS Loans or private student loans for parents, refinancing could help you secure a lower interest rate. Refinancing also will give you control over the length and monthly amount of your repayment.
  • Step up your retirement contributions, especially in the last 10 years before you retire. Refinancing parent student loans can produce savings, which you can then contribute to retirement.

Taking out student loans for parents can set back retirement — but parents don’t regret it

parent student loansMost experts advise adults to pay down debt as they transition to retirement. Those nearing retirement age and carrying high balances on student loans for parents will have to work a lot harder to follow this advice. Plus, debt diverts money away from retirements savings.

Despite the potentially negative effects of this student debt, most parents (66 percent) don’t regret it. In fact, just 18 percent said they regret cosigning or taking out student loans for a child’s college costs.

Majority of parents don’t know their student loan repayment options

Many parents struggle with their student debt burden. But this survey also reveals that a majority of parents are unaware of options that can help.

student loans for parents

For instance, 19 percent of parents surveyed said they were unaware they could put their Parent PLUS Loans on an IDR plan — called Income-Contingent Repayment. And 12 percent didn’t know they could refinance parent student loans into their child’s name.

What’s more, almost 2 in 5 parents (19 percent) surveyed said they were unaware of Public Service Loan Forgiveness (PSLF), which can help eliminate debt for parents and students who hold government jobs or work for certain nonprofits.

Even when parents said they knew about options, they weren’t always valid. For example, 17 percent of parents said they knew about “Obama student loan forgiveness” — even though no such program exists.

Parents could be missing out on student loan refinancing

Refinancing student loans can solve a few problems at once. Borrowers can get lower student loan rates and lower monthly payments. Refinancing also can be a way to move student loans from a parent to a child (or vice versa) or remove a cosigner.

Twelve percent of parents surveyed had already refinanced student loans used for a child’s college to be solely in the parent’s name. A parent might want to refinance to take over a student loan they cosigned and are repaying because a child can’t afford to, for example. Eleven percent didn’t even know it was an option.

Parents also can refinance student debt into the child’s name. Doing so can make the child the legal owner of the loans or remove the parent as a cosigner. Here’s a breakdown of responses from parents regarding refinancing student loans into a child’s name:

  • 64 percent hadn’t considered this option.
  • 16 percent didn’t know refinancing student loans into a child’s name was an option.
  • 20 percent had considered it.

Parents who are interested in making such a move should do so soon. Interest rates are expected to increase in the coming years. Borrowers likely will get the best deals if they don’t wait to refinance student loans for parents.

Putting refinancing and interest rates into perspective, a third (36 percent) of parents said they’re either somewhat or very likely to refinance student loans. Another third said it’s unlikely to affect their decision (32 percent). The remaining third (32 percent) said they’re unsure.

Look for solutions together to repay parent student loans

Most parents who helped their children borrow for college are glad they did. But that doesn’t mitigate the potentially negative effects of student loans for parents.

When the arrangement isn’t working, parents and children need to proactively seek solutions.

The good news is parents likely have more student loan repayment options than they realize. Parents should take the time to research these options so they can create the best repayment plan for themselves and their children.

Methodology: This survey was conducted via Google Consumer Surveys on behalf of Student Loan Hero on April 5-9, 2017, with a nationally representative sample of 1,001 adults living in the United States. “Are you currently making payments on student loans you cosigned for or took out for your child(ren)’s education?” was used as a screening question (with a target answer of “yes”). The survey margin of error ranged from 4.5 to 4.8 percent.

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1 Important Disclosures for Earnest.

Earnest Disclosures

To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.

Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.

Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.

The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at hello@earnest.com, or call 888-601-2801 for more information on ourstudent loan refinance product.

© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.


2 Important Disclosures for Laurel Road.

Laurel Road Disclosures

APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.

Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.

However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.


3 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance:
    Fixed rates from 3.899% APR to 7.979% APR (with AutoPay). Variable rates from 2.470% APR to 6.990% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.470% APR assumes current 1 month LIBOR rate of 2.30% plus 0.91% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score.
  2. Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

4 Important Disclosures for LendKey.

LendKey Disclosures

Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.


5 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.

All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.


6 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Education Refinance Loan Rate Disclosure: Variable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of November 1, 2018, the one-month LIBOR rate is 2.29%. Variable interest rates range from 2.79%-8.39% (2.79%-8.39% APR) and will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a cosigner. Fixed interest rates range from 3.75%-8.69% (3.75%-8.69% APR) based on applicable terms, level of degree earned and presence of a cosigner. Lowest rates shown require application with a cosigner, are for eligible, creditworthy applicants with a graduate level degree, require a 5-year repayment term and include our Loyalty discount and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty and Automatic Payment Discount disclosures. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of their loan.
  2. Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer with the Education Refinance Loan. Borrowers should carefully review their current benefits, especially if they work in public service, are in the military, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans and replace those with the benefits of the Education Refinance Loan. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision at http://www.citizensbank.com/EdRefinance, including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.
  3. Citizens Bank Education Refinance Loan Eligibility: Eligible applicants may not be currently enrolled. Applicants with an Associate’s degree or with no degree must have made at least 12 qualifying payments after leaving school. Qualifying payments are the most recent on time and consecutive payments of principal and interest on the loans being refinanced. Primary borrowers must be a U.S. citizen, permanent resident or resident alien with a valid U.S. Social Security Number residing in the United States. Resident aliens must apply with a cosigner who is a U.S. citizen or permanent resident. The cosigner (if applicable) must be a U.S. citizen or permanent resident with a valid U.S. Social Security Number residing in the United States. For applicants who have not attained the age of majority in their state of residence, a cosigner will be required. Citizens Bank reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Education Refinance Loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, certification of borrower’s student loan amount(s) and highest degree earned.
  4. Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  5. Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
  6. Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply.

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.