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Pricey Dave,
My spouse and I are debt-free aside from our mortgage and two Dad or mum PLUS loans for our daughters’ school educations. One of many loans totals $18,078, and the opposite is for $41,500. Each women wish to pay them off utilizing the brand new prolonged plan being provided, however I’m 59 1/2, and I’ve obtained about $500,000 in a 401(ok) from a earlier job together with $125,000 from a job I began 5 years in the past. We’ve been interested by simply paying the loans off for the ladies, however we wished to know your ideas.
Mike
Pricey Mike,
If I have been in your footwear, I’d simply go forward and pay them off. Technically, you’re answerable for the loans. They don’t seem to be.
The prolonged plan you’re speaking about is rubbish. In actuality, it means the loans are by no means paid again. The prolonged plan is 30 years of not even making the principal fee. No curiosity is paid, and so they don’t contact the principal. The entire thing works backward for 30 years, and it’s the very definition of a silly authorities program.
I actually don’t assume you need your daughters to be a part of one thing like this. However meaning you’re going to be caught with paying off these loans. You may as effectively simply personal it and pay them off now.
I need you to know this, Mike. I don’t advise individuals to dip into their financial savings each time an issue comes up previous to retirement. However you’re 59 1/2, and at that time there’s no penalty. Plus, you’ve obtained $625,000 sitting there. You’re going to drag lower than $60,000 out, plus just a little in taxes, to make the issue go away. It’s not as dangerous because it may very well be, however I’m afraid you’re going to should pay just a little silly tax on this one. I’m positive your women didn’t know all this, but it surely’s an ideal instance of what can occur if you put your religion in a silly plan popping out of Washington, D.C.
I hate it for you guys—and everybody else in America who took out a bunch of scholar loans—since you’re getting messed over by your individual authorities. The primary method they messed you over was to place a scholar mortgage program on the market after which inform you the way in which to success was to borrow tens and lots of of hundreds of {dollars} for a level in left-handed puppetry. And now, guess what? You’re a barista! Then, they begin shouting they’re going to forgive all of it. After that it’s, “No, we’re not. Sure, we’re. No, we’re not. Sure, we’re.”
The actual fact is, they don’t intend to forgive it. It’s the most important rip-off in historical past—mathematically talking—perpetrated on the American public by our authorities.
— Dave
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