Got Parent PLUS loans? Pay 'em off.

I write a lot about paying off student loans. Because if you have them you should pay them off. But the same can be said for parent student loans. Actually, I take that back, it's not the same. Parent student loans are WAY more important to pay off. Why? One word: retirement.

Look, if you have $35,000 in student loans at age 22, it sucks. But you can recover. In fact, if you make it a priority you can have the debt paid off before you hit age 30. Plus, you'll have developed a lot of important financial skills in the process. But if you take on $35,000 in parent student loans at the age of 46 you're screwed. Well, not totally, but you have a lot of work to do. Paying the minimum on that size of loan will have the debt paid off dangerously close to retirement age.

"Let’s say the minimum payment for your loan is $420, which has you paying off the loan at the age of 60. While this means you’ll have the loan paid off in your pre-retirement years, the money you will have spent paying off the loan could have been going toward your retirement plan. Time is really the bigger issue here. When it comes to retirement planning, earlier is always better, so knocking out that student loan early means you can start moving the loan payment money toward your retirement plan sooner."(courtesy of SmartyCents.com)

Increasing your monthly payments by $280 will cut your loan repayment period in half saving you thousands in interest. But can you do it? Can you cut back enough to make room for such a large payment? I believe you can because you have to. If you want to retire, this is your only option.

"Retirement is essentially the ability to break your dependence on your income, and what feels more like breaking than losing $700 a month for five years? If you can actually change your lifestyle to live on $700 less a month, you are so much closer than so many of your peers to a great retirement. When the Parent PLUS loan is paid off, use the momentum you’ve achieved—and that money you’ve learned to live without—to increase your retirement fund. It may seem like losing this income will be too great of a burden to carry beyond the five years, but you can do it. Breaking your income dependence is like ditching a bad habit. It hurts at first, but once you’re “broken,” the new habit sticks. Once you learn to live on less, you actually start wanting less. Most people just don’t stick with it long enough for it to get easy. But as an adult in pre-retirement with parent student loans, you don’t have any other choice."(courtesy of SmartyCents.com)

Your kids' education is important, and it was really nice of you to take on the cost of their education. But something has to give. Either you have to have a plan to pay off the loans before you retire or you need to have a conversation with your kids about how they can help out.

Read more about how to pay off your parent PLUS loans in my SmartyCents.com column here.