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This week on the Pete the Planner Show, Peter and Dam- wait… no; Kristen! Pete and Kristen connect to throw down the gauntlet on real personal finance questions!
No time to listen? Here’s a preview of what happened and when:
Show Notes:
PARENTS AND ADULT CHILDREN FINALLY SEPARATING, FINANCIALLY: [3:22]
- [Awhile ago, Pete wrote an article about giving children a timeline on becoming fully financially independent. This family took that did that and it caused some conflict.] “Recognizing that you wrote that article several years ago, before the pandemic, would your advice change any now? Instead of immediately cutting a child off financially because of an argument, would it have been better for us to give my son a 6 month deadline? My husband thinks he is in need of a little tough love, at age 27. My son feels that it’s a tough time finding a job right now. Is this what he needs to grow up and just get a taste of the real world?”
- KRISTEN: I really want to give the son the benefit of the doubt, but it doesn’t feel difficult to find A JOB right now, the question is if it’s THE JOB he wants.
- PETE: There are jobs available, in light of the pandemic. Is it manual labor or less fun? Maybe. I think wages will go up, as well.
- KRISTEN: Is he actively trying to make ends meet? If so, then the family can rally and gradually work with them. If the son isn’t standing on his own two feet, then a grace period may not be ideal.
- PETE: Additional context: he’s very stable financially, has no expenses, and has savings from not having to pay for college due to scholarships. He’s gotta get out.
- KRISTEN: Parents: prepare for the conversation that’s coming.
COLLEGES RUNNING UP THE TAB ON PARENT PLUS LOANS: [15:39]
- WSJ: “How Baylor Steered Lower-Income Parents to Debt they Couldn’t Afford” — The Texas University and other wealthy colleges guided parents into ‘no limit’ parent PLUS loans. This leaves many poor and middle class families with debt they can’t repay.
- KRISTEN: Ideally, the family first completes the FAFSA, which determines what the family can be expected to contribute to college. Then, the school takes the cost of attendance and subtracts what your family contribution can be. Need-based aid options then kick in. That gap in funding creates the situation for these Parent PLUS loans.
- PETE: It’s easy to see how parents get flustered at the prospect of their children not being able to complete a degree, so they take a “We’re gonna have to borrow anyway, so we might as well borrow whatever you need.” Unlimited loans are not a good idea; repayment can drown a lower income family.
- KRISTEN: Yes, the answer is don’t go to a really expensive school you can’t afford, unfortunately. There can be better schools that cost less.
- PETE: Parents owe $103.6 billion in Parent PLUS loans. Taxpayers bear the losses if families can’t pay.
Play the rest of the show for the rest on this topic and more! Check it out in the full show! — click PLAY below.
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Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.