Student Debt And Your Estate Plan
As going to college has become an expectation for a greater and greater number of young adults, student debt has become almost universal after those students graduate or decide, without making it all the way to graduation, that paying for college will do them more harm than good in the long run. If you are in your 30s, you have probably had some sobering conversations with your spouse or a financial counselor about how you are unlikely to be able to pay your loan balance down to zero by the time you reach age 65. Nearly half of borrowers of federally backed student loans are enrolled in income-driven repayment plans. This means that the new generation of people in their 30s and 40s are doing their estate planning under the shadow of student debt. Everyone needs an estate plan, regardless of how much you borrowed and how much you still owe. A Hillsborough County estate planning lawyer will help you develop a realistic estate plan that factors in your student debt.
If You Borrowed Money to Fund Your Own Education
Millennials have grown up with the awareness that they will have to live more modestly than their parents did, and they have largely embraced this fact. If you are in your early 40s or younger, build an estate plan that does not assume that your income will steadily increase throughout your career. If you have an income-driven repayment plan for your student loans, you are already used to putting a sizable portion of your income towards something other than your living expenses. Once you complete the 25 years of income-based payments, put that amount each month toward retirement, long-term care insurance, or both. By then, you will have thought of plenty of ways to live within your means during retirement.
If You Borrowed Money to Fund Your Children’s Education
If you borrowed Parent PLUS loans to help your children pay for their education, then retirement age is coming sooner for you than it is for people who took out student loans to fund their own education. Income-driven repayment programs for Parent PLUS loans are also 25 years, but borrowers must pay 20 percent of their discretionary income each month. By the time those 25 years pass, most parents have reached the age where employers start encouraging employees to retire. If you are considering taking out a Parent PLUS loan for your child’s education, do not do it without first discussing your repayment strategy, and the big picture about your finances, with an estate planning lawyer. If you are struggling with the income-based payments, an estate planning lawyer can also help you think clearly about your financial priorities.
Contact Us Today for Help
When you took out student loans, you probably never imagined that you would be discussing them with a lawyer, but a Tampa probate lawyer could be just the person to put your finances in perspective. Contact David Toback for help with your case.