When Renee from New Orleans called into The Ramsey Show, she revealed a painful family story: her dad consolidated three Parent PLUS loans — taken out years ago for his daughters’ education — and now, as he nears retirement, complains his kids are “the reason he’s broke.”
Personal finance celebrity Dave Ramsey, visibly frustrated, told Renee he felt disappointed by her father’s “guilt tripping.” He urged him to “be a man of honor,” pay his own dues and stop unloading the consequences of his decisions onto his adult children.
“[He] signed up for this trip. Don’t dump it on your kids every time they come over for Thanksgiving,” Ramsey declared.
The Parent PLUS Loan is available to parents of college-bound children to help pay for education expenses not covered by other financial aid. The loans are credit-based, not based on the family’s income or assets.
Renee admitted that there was a vague understanding that the siblings would pitch in after graduating, but that plan quickly dissolved. When discussing the possibility of the sisters paying the loans off, Renee’s mother insists none of them pay unless all three contribute equally.
When asked whether she and her sisters had roughly $15,000 each to pay off the $40,000 balance, Renee admitted they didn’t.
Renee, who is now in her 30s, earns $50,000 a year, said she and her husband bring in a combined annual income of around $125,000. They’re not in a financial position to cover the Parent PLUS loans her father took out, with just $3,000 in their savings and a car loan of $26,000 hanging over their heads — not to mention a third kid on the way.
Renee’s oldest sister paid for about a year before getting married and having a child, after which their parents relieved her of the obligation. The second sister followed the same path. “By the time it got to me, none of them were paying, so they never made me pay,” Renee explained.
Emotionally exhausted from the ongoing guilt, the resentment is taking its toll on Renee, who admitted, “It has pushed us away.” Ramsey was empathetic towards her and firm in his assessment: “Nobody likes hanging out with a travel agent for guilt trips.”
He warned that her father’s continuing to weaponize his financial decisions could erode their relationship and encouraged Renee to let go of the burden. “You do not owe this money,” he said. “You really don’t.”
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Renee’s story highlights just how messy it can get when family and finances intertwine, especially when expectations around student debt repayment are vague. Whether you’re dealing with Parent PLUS loans, personal debt or something in between, it’s important to protect your financial health as you chip away at what you owe.
If you’re in a similar situation, here are some smart strategies to pay it off quickly without draining your savings or jeopardizing your future.
Build a starter emergency fund. Aim to set aside $1,000 to $2,000, so unexpected expenses don’t derail your progress.
Temporarily follow the 50/30/20 guideline. Splitting your payments into two per month can reduce the total interest you pay and help you stay consistent.
Automate biweekly payments. Paying twice per month speeds up your total payoff because of the rate at which interest accrues.
Choose the right payoff method. The snowball method builds motivation by clearing the smallest balances first. The avalanche method saves more in the long run by targeting the highest-interest debts.
As Ramsey reminded Renee, guilt and pressure won’t pay off the loan, and neither will financially self-destructive decisions. It’s important to avoid the following strategies, no matter how tempting they may feel:
When trying to pay off a loan quickly, it’s crucial not to direct all of your spare income toward debt if it leaves you without a cushion. Remember, no matter how large your debt is, you need funds to pay for basic living expenses.
Don’t empty retirement savings or tap your 401(k). Early withdrawals can incur penalties and can derail long-term growth. These accounts are crucial for your long-term financial health.
If you’re dealing with more than just student loan payments, you may consider debt consolidation as a means of cutting your bills down to size. If you have a good credit score, getting approved for a consolidation loan can help lower your interest rate, make your monthly payment easier, and shorten the window of time it takes to pay down your debt.
Finally, resist co-signing on loans or financially rescuing others if it damages your future stability. Steer clear of taking on any new debt, such as credit cards or payday loans, to cover old debts, no matter how enticing the offer may seem.
Renee’s experience underscores the emotional toll that debt can take, especially when it’s wrapped up in family dynamics. Ramsey’s advice to “let go of the guilt” is a reminder that sometimes the most responsible thing you can do for yourself and your future is to set a boundary.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
