- Robert Pemberton, 64, has $ 265,000 in loans for his two children’s education.
- Pemberton told Insider that paying off that debt is delaying his retirement.
- He doesn’t regret taking the loans, but he said it was a little too easy to grow all that debt.
- See more stories on the Insider business page.
Robert Pemberton was surprised that it was so easy for him to take out loans to send his children to school.
When his daughter and son entered college in 2005 and 2006, respectively, Pemberton was earning a six-figure salary, but a business merger changed his financial situation and he had to take out loans – around $ 25,000. per semester – to help pay for their studies. . Shortly after taking these first loans, Pemberton was fired. To his surprise, the government continued to let him borrow money without pay.
Today, Pemberton’s indebtedness stands at $ 265,000, and although he now earns a living wage as a senior program manager for a computer manufacturer, his debt has become unmanageable for a period of time. unemployment after his children graduated and while his wife was battling cancer.
“It’s a never-ending cycle where the loan can never be repaid unless I have a windfall and pay it all off, or I die and it’s gone,” Pemberton, 64, told Insider . “I don’t know if I will be able to work until I am 80 years old.”
Parent PLUS loans, the type that Pemberton pays off, are federal loans that allow parents to pay for their children’s education. They can cover the full cost of schooling minus any financial assistance the child has already received. PLUS loans are the most expensive type of loan, with the highest interest rate.
Each of Pemberton’s children has taken out about $ 30,000 in student loans themselves, but PLUS loans make it harder for parents to keep up with payments than a typical student loan borrower. Plus, parents with these loans don’t seem to be included in the growing national conversation about student debt cancellation.
He said he did not regret taking the loans, but wanted the terms he was committing to be made clear to him.
“I don’t regret taking them, but I regret not reading carefully,” Pemberton said. “I was going to do whatever it took to help my kids and get them started in their careers.”
“When the bottom goes down, there is no help and the lenders just want the money”
After the Pemberton children graduated, he was out of work for three years while his wife battled cancer, and FedLoan Servicing – the company that manages Pemberton’s loans – allowed him to defer payments until ‘he finds a job.
But even though his payments were suspended, interest continued to accrue, failing to provide the relief Pemberton hoped for. Meanwhile, interest has kept piling up – PLUS loans now have an interest rate of 6.28% for the 2021-2022 school year, compared to 3.73% for undergraduate loans .
Pemberton said FedLoan had not clarified that even though he would not collect his monthly payments, he would still charge around $ 35 a day in interest. FedLoan recently announced its closure at the end of this year. Education Department official Richard Cordray – a longtime ally of Elizabeth Warren – said maintenance services were shutting down rather than face increased federal scrutiny for the kind of deceptive practices Pemberton faced .
Since PLUS loans are based on the cost of dating, parents can borrow money regardless of their income, and this type of uncontrolled borrowing makes it easy for parents like Pemberton to get into debt without really having to worry about it. know what they are getting into. Pemberton described the process as being “on autopilot”, and all he had to do was “sign a paper”.
To pay for his wife’s medical care, he cashed in his retirement and pension funds and attempted to pay medical bills, as well as basic necessities, with only his part-time job of $ 10 an hour and help from his church. And every day, when he sat with his wife in the hospital, he applied for jobs for hours.
“I got up every morning, I dressed like I was going to work, I sat in front of the computer and read jobs for six to seven hours a day for almost three years,” Pemberton said. “It wasn’t like I was just sitting lazy. But when the bottom falls, there is no help and the lenders just want the money.”
Now Pemberton doesn’t know when he will retire and he wants PLUS loans to be part of the larger conversations about canceling student loans, given they weren’t mentioned in Democrats’ calls to cancel. $ 50,000 in student debt per borrower.
“What about those who put their children in school? Pemberton said. “I wish I could find an investment or a lottery or just pay it off and be done with my debt.”