Here’s one way employers are trying to lure debt-laden boomers – marketwatch

It’s become so common for parents to take on debt to finance their kids’ education that employers may soon be offering to pay those loans off.

Tuition.io, a company that helps employers manage their student loan repayment programs, launched a platform Tuesday that firms can use to help pay off their workers’ Parent PLUS loans, the federal government product that parents can use to pay for their kids’ college.

It’s still too early to tell how many employers will actually offer to pay off parents’ loans; Tuition.io is in talks with a number of employers who are interested. Government jobs and student loans But offering to pay off the education debt held by parents may be attractive to companies looking to set themselves apart from the several firms already paying off the student loans of young workers. Government website for student loans Extending student debt help to parents also allows companies to include more of its employees in the perk, which experts and companies have touted as a retention tool. Student loans gov mpn Now firms can use it to convince their most experienced staffers to stick around, said Brendon McQueen, the founder and chief executive of Tuition.io.

“As parents, many of whom are baby boomers, are thinking about retirement they have to carry this extra burden,” McQueen said. Repayment of student loans “We put ourselves in the shoes of an employer and we said ‘these are the most skilled people at our companies, they have the most experience, they know the lay of the land and so it would make sense to include them in these programs.’”

The option comes at a time when families are increasingly relying on parent loans to finance schooling as the cost of college continues to rise and many of their other options remain limited. Site to pay federal student loans The typical undergraduate can borrow a maximum of $27,000 in federal loans for four years of school.


Pay government student loans Parents, on the other hand, can borrow up to the cost of their child’s schooling minus other grants and aid each year from the federal government.

Borrowers with Parent PLUS loans made up 19.9% of all federal student loan borrowers in the 2011-12 academic year, up from just 4.1% in 1989-90.

“If you’re sending your child to an expensive college it is the only pressure relief valve available to you to help you pay for it,” said Mark Kantrowitz, a financial-aid expert and the publisher of Cappex.com, said of PLUS loans.

Borrowers with Parent PLUS loans made up just 4.1% of all federal student loan borrowers during the 1989-90 academic year, according to an analysis of government data by NerdWallet, a personal finance site. Government student loans canada That share grew to 19.9% by the 2011-12 academic year, NerdWallet found.

Now, roughly one in six college graduates benefited from a Parent PLUS loan, according to Kantrowitz. Ed student loans The Parent PLUS loan volume has doubled over the past decade, he said. Direct student loan processing center Private lenders are also entering the parent loan space. Canada student loans Sallie Mae followed Social Finance (better known as SoFi) and Citizens Bank, when it started offering its own parent loan product last month.

Though it’s tempting for parents to want to shoulder the loans instead of their kids, financial aid experts suggest students exhaust their borrowing options before families turn to a parent loan. Government student loans south africa The federal government offers students lower interest rates than their parents and the Parent PLUS loan doesn’t come with as many protections as federal student loans.

What’s more, students have their entire working life to pay off the loan and ideally, they’ll reap the investment of their degree. Student loans company apply Parents’ wages on the other hand aren’t dependent on whether their child graduates college. Government loans student Relying on Parent PLUS loans to pay for college may be a sign that families are over-borrowing, Kantrowitz said.

For parents who do decide to take on the loans, Kantrowitz recommends they borrow no more in total for all of their children than they make in one year. Paying off student loans That way the parents will comfortably pay the debt off in 10 years. Repaying student loans Parents who plan to retire in less than 10 years should take that into account and borrow less so they can retire debt-free, Kantrowitz said.

The loans can be a challenge for borrowers in retirement. Department of education student loans The federal government has the power to garnish borrowers’ Social Security benefits when they don’t repay their federal student loans. Goverment student loans In 2013, 36,000 people over the age of 65 had their benefits offset to cover student loans, compared with just 6,000 people in 2002, according to a 2014 report from the Government Accountability Office. Paying off student loans with a credit card In fiscal year 2013, 17% of Parent PLUS loans held by borrowers between the ages of 65 and 74 were in default, the GAO found.

But with much of the student loan discussion focused on 20-somethings held back by their debt, this population is often ignored, said McQueen. Student loans uk Parent PLUS loans are “a huge chunk of the debt and nobody really talks about it,” McQueen said. Paying off student loans before graduation McQueen is all too familiar with their struggle — his mom is a Parent PLUS loan borrower. Student loans company online “Our intention is also here to shed some light on this.”

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