parents who took out loans to pay for their kids' college, debt could jeopardize retirement.
That's because they took out parent PLUS loans — the most expensive type of student loan with the highest interest rate. A direct PLUS loan, commonly referred to as a parent PLUS loan, is a type of federal student loan parents can take out to pay for their kids' educations. To receive a PLUS loan, according to, all parents needs to do is prove they have good credit history and meet the general eligibility requirements for federal student aid, and the government will then lend them money that can cover up to the cost of attendance for their child minus any other financial aid the child already received.
Compared to other types of student loans, though, PLUS loans can accumulate quickly if the parents doesn't have the financial means to pay them off immediately. Insiderin June on the new interest rates for different types of federal student loans that will be in effect until July of next year: direct loans for undergraduates have a rate of 3.73%, direct loans for graduates and professionals have a rate of 5.28%, and PLUS loans hold the highest rate of 6.28%.
For 64-year-old Robert Pemberton who has $265,000 in PLUS loans he took out for his two children, debt is an"endless cycle where the loan can never be paid off unless I have a windfall and pay it all, or I die and it goes away."Pemberton told Insider the process to take out the loans was strangely easy, and he described it as being"on autopilot" and all he had to do was"sign a paper.