Parent PLUS loans and… a church car?

Dear Dave,

My mom took out a Parent PLUS Loan in 2009 to help pay for my college education. I also took out $70,000 in student loans myself. My mom never made a payment on the loan she took out for me, and now the amount owed on the Parent PLUS loan has soared to $100,000. She recently told me in her mind that it was my loan in her name and that I should be the one to make the payments once I was financially stable. Fortunately, I just found a new job that pays $140,000 a year. With this, I can finally make a dent in my own loans, but she asks me every week if I’m going to pay the Parent PLUS loan. My mom is a nurse practitioner so she makes a lot of money, but she recently financed two new luxury cars 24 hours apart, one for work and one for church. She also has borrowings on her 401(k) loans and credit card debt. Do I have to take over the Parent PLUS loan in my name?

tommy

Dear Tommy,

Wait, are you serious? Your mom has a church self? I have never heard of such a thing. But hey, I’ll talk to my wife about it. I knew I needed another car, didn’t know I needed one church auto. Oh my God!

Ok, here’s the deal. If you had an agreement with your mother, or promised at any time to reimburse the Parent Loan PLUS when you could, you should cover it. But that’s not what you told me. Looks like your mom has a good heart and was just trying to help, but she did it in a stupid way. From what you told me, she did a lot of mischief with the money.

Under no circumstances will you take over the loan in your name. In fact, I’m not sure you can even do that with a Parent PLUS loan. You must get your debt cleared before trying to help her. If you choose to be a bigger helper after this, you need to start by having a serious conversation with your mother. She needs to hear that she is completely stupid with her money. Let him know you’re ready to help because the loan was for your benefit. But make sure she understands that you won’t be paying for everything, and you won’t be doing it while she’s making two luxuries. car payments—including one in one church auto. It’s ridiculous.

Offer to be her biggest cheerleader and help her find a good financial coach, someone with the heart of a teacher. You might want to let her know that you’ll match whatever she pays for the loan, so it feels like a team effort. But also make sure she understands that if she pays nothing in any given month, you’ll match that too.

Good luck Tommy!

— Dave

Dave Ramsey is an eight-time national bestselling author, personal finance expert and host of “The Ramsey Show», heard by more than 18 million listeners. He has appeared on “Good Morning America”, “CBS This Morning”, “Today”, Fox News, CNN, Fox Business and many more. Since 1992, Dave has been helping people regain control of their money, build wealth and improve their lives. He is also CEO of Ramsey Solutions.