Dad Owes $100K for Daughter's College After She Dropped Out

A father is stuck with a massive college loan after his daughter couldn't finish school due to health problems. Now he's wondering if switching to a different loan could save money.

The Situation A man took out a $100,000 Parent PLUS loan (a special loan parents can get for their child's education) expecting his daughter to pay it back after graduation. But she dropped out after two years because of mental health issues. She recently lost her part-time job and likely can't repay the debt.

Why Refinancing Might Be Risky The family is considering refinancing (switching to a new loan with different terms), but experts warn this could backfire:

• Federal loans have fixed interest rates (the rate never changes), while private loans often have variable rates that can go up • Parent PLUS loans offer special protections like payment plans based on income • If the parent or student becomes disabled, federal loans can be forgiven • Once you switch to a private loan, you can't switch back

What's Changing Starting July 2026, parents will only be able to borrow: • Maximum $20,000 per year • Maximum $65,000 total per student

This replaces the current system where parents can borrow the full cost of college.

The Bottom Line While refinancing might offer a lower interest rate initially, losing federal protections could cost more in the long run. The father should carefully weigh all options before making this irreversible decision.

This is an AI-generated summary. Read the original article at: https://www.marketwatch.com/story/my-husband-took-out-a-100-000-parent-plus-loan-for-his-daughter-she-dropped-out-should-we-refinance-bea7dc6e?mod=mw_rss_topstories