Student Loans in My Dad's Name - How Aggressive to Be?

[Smashter]

When I was looking at colleges, my parents told me not to worry about price. They wanted to pay for college, no matter how much it cost.

Fast-forward to 4 years later, past the 2008 crisis, past my Dad having his income drop by 75%, and college wasn't so much paid for as borrowed for. He took out all the loans in his name because he was determined to pay them all back.

The loan upon graduation was 147,000 dollars at 7.3% interest. It had ballooned up to 165,000 by the time my Dad invited me out to breakfast and told me that he really hoped I would start making the minimum monthly payments by the time I turned 30.

He really, really wanted to pay this loan for me, but he just couldn't anymore. He was going through a divorce and money was tight.

I decided to start paying right away. I actually had no idea how big it was until he told me, which was 5 years after I graduated. (I am now trying to get my little sister to understand how much debt she is about to graduate with and how crippling it can be. She could not care less. Financial literacy isn't my family's strong suit.)

Since I had money saved and I just got a pretty good job, I decided to be very aggressive paying down this loan.

The debt currently sits at 65,000. I have had friends and family members telling me to slow down and to invest some of the money, especially because the loan is not in my name. From what I understand, if my Dad were to die, the loan would die with him. He's a relatively healthy 57-year-old, so that's not a concern of mine.Of course, I could always just tell my dad "tough luck, you took out the loan, not me" but I would never do that.

Anyway, would you guys keep pumping money into debt at 7% if it wasn't in your name? Would you try to get a personal loan to reduce the interest rate? I tried with Sofi a few months ago but they wouldn't approve me because I don't have 2 years of W-2's from my high paying job.

My current plan is to just keep crowbarring the living sh*t out of this loan so I can experience peace of mind in 18 months or so. Any thoughts or ideas are much appreciated.

[Tyler9000]

I went through a very similar process with my own father & student loans. FWIW, I think you're doing the right thing and I admire you for doing such a good job paying it down.

Yes, I would recommend continuing to look for opportunities to refinance to a better rate. Is all the debt already consolidated into that 7.3%? If not, definitely prioritize the highest interest loans.

The good news is that you've already made fantastic headway. Keep up the good work!

[Dragline]

Me three, although the amount was not that large back in the day. Don't ask about law school, though.

This is yet another cautionary tale on educational debt.

Did he pay any of it? I feel like it would be fair to leave him with some proportion of it, since it was his idea. But that might not be practical.

I would not refinance it in your own name -- could cause you credit problems.

[vezkor]

Keep doing what you're doing.

Your situation is much better because he is/was determined to take care of things and, due to circumstances, you are in a position to help him with payments. The sooner the banks aren't making money on your past, the better.

[Tyler9000]

I would not refinance it in your own name -- could cause you credit problems.

That brings up an interesting point. Even though you were rejected for a personal loan, your dad may have more refinancing options under his name. Maybe you can help him refinance to a better rate while continuing to pay down the debt yourself.

[Gilberto de Piento]

I paid off $75,000 in student loans a few years ago. About $10,000 of that was to my parents. They got some bad advice to take out a personal loan from the bank and then give me the money to cover part of my education. They paid off the bank and I paid them back as soon as possible, before the other loans or doing any investing. I was happy to pay it off and they were happy I did. Good luck with this situation.

[Smashter]

Did he pay any of it? I feel like it would be fair to leave him with some proportion of it, since it was his idea. But that might not be practical.

He has only been making the minimum monthly payment, which of course had no effect on such a large loan. He lost ground. He will still keep making small payments until I turn 30 (which will be 6 months from now.)

I've never considered leaving him a chunk of it. I'll have to ponder that option. I know that if he reclaims his former financial standing he would be happy to start helping in a bigger way. He's a great guy going through a rough time.

Even though you were rejected for a personal loan, your dad may have more refinancing options under his name. Maybe you can help him refinance to a better rate while continuing to pay down the debt yourself.

I should look into this, but I doubt it's an option. I imagine his credit is in a pretty bad spot. He's had a lot of IRS troubles in the past few years. One thing I like about repaying the debt while it's in his name is that it might help him rebuild his credit.

Is all the debt already consolidated into that 7.3%? If not, definitely prioritize the highest interest loans.

Everything has already been consolidated. Just this one bear to do battle with

Thanks to all for the encouragement and advice. Looks like I'll keep on keeping on and put aside my idea of re-financing in my name.

[George the original one]

As long as you're saving some emergency fund money and you're determined to pay off a 7.3% loan not in your name, then continue on.

[Smashter]

I made my last payment today. My dad will finish off the final bit with his contribution this week. Feels so good to have it gone. I couldn't have done it without this community, thank you!

[Gilberto de Piento]

Great job! Congratulations!

[GandK]

I made my last payment today. My dad will finish off the final bit with his contribution this week. Feels so good to have it gone. I couldn't have done it without this community, thank you!

Wow! Yes, congratulations!

[George the original one]

Wow, $65k knocked off in less than a year! You are going to do well on your other financial goals.

[Smashter]

@George, thanks! I suppose I should give more context, considering I gave so many details above.

My Dad received 20k from Grandpa's estate when he died about 10 months ago. He generously put that amount into the loan. So, it was only 45k from me in less than a year. Still a ton, of course, and I'm very proud of how quickly it went. One could argue I was too aggressive, but it was a psychological burden that I wanted gone asap.

I didn't get anything from my Grandpa, to be clear. Not saying that to sound bitter. He didn't have a ton of money, so I was never expecting anything.

[Campitor]

@Smashter

I applaud you for helping out your dad, for getting your part paid so quickly which requires fiscal discipline, and for keeping your word. You will go very far in life. We need more people like you in the world.