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- Jeff O'Kelley, 57, has $104,118 in student debt from loans he took out for his son's college.
- He said he doesn't regret taking them out because he wanted to give his son the best future possible.
- O'Kelley isn't sure whether he deserves student-loan forgiveness himself, but he says the debt is a "hindrance on the economy."
- See more stories on Insider's business page.
Jeff O'Kelley wants to be clear: he was not defrauded by the student-loan system.
In hindsight, however, he wishes that it had been a bit harder for him to take out such a large loan to pay for his son's college, considering his income at the time and the ballooning interest rates since.
When O'Kelley's son graduated high school with honors and an International Baccalaureate diploma in 2019, he had high hopes for college. At the time, the 57-year-old was self-employed as an entertainment photographer with an income of around $40,000, his finances weren't joined with those of his second wife, and he didn't want his son to miss out on any opportunities because of money.
So he turned to parent PLUS loans to pay for his son's education at George Washington University, and he told Insider the process was "extraordinarily simple."
"I go online, put in a little information and hit submit, and 60 seconds later, there's another $30,000," O'Kelley said. "I got very little information and very little confirmation and I think that's the part that gets me the most. It was too easy, and it shouldn't have been."
Now he has $104,118.60 in student debt with 360 monthly payments to go - each payment about $760 - meaning he will be 88 years old when he finishes paying off his debt, "that is, if I live that long," O'Kelley said.
Jeff O'Kelley
Parent PLUS loans, the type that O'Kelley is paying off, are federal loans for parents to pay for their children's education. The company that services the loan does not factor in the parent's income when issuing the loan, instead basing it on the cost of the student's attendance minus any financial aid the child already received. PLUS loans are the most expensive type of loan with the highest interest rate - 6.28% - compared with 3.73% for undergraduate loans, allowing debt to accumulate a lot quicker for parents.
O'Kelley said it would have made sense for Nelnet, the company that services his loans, to have turned him down given that he didn't have a verifiable income, but that didn't occur to him at the time because his main focus was giving his son the best future that he could.
Nelnet did not immediately respond to Insider's request for comment.
"It was my obligation to do the best I could for him," O'Kelley said. "It got my son what he really wanted, and I felt like it was my obligation to do that as a parent."
'This is a horrible, horrible black hole to fall down into'
There's a Ferrari dealership a mile away from O'Kelley's Florida house, and he said that if he were to walk into the dealership and ask to buy a car, they would never just sell it to him on the spot - they would need confirmation that he could afford it.
But with his PLUS loan, he said, he essentially got a Ferrari with no verification.
"I got sucked into it and probably lots of other people did the same thing," O'Kelley said. "This is a horrible, horrible black hole to fall down into."
O'Kelley isn't the only parent to have fallen into the "black hole" of PLUS loans without realizing how quickly the debt would accumulate. Insider previously spoke to two borrowers, one with $550,000 in debt for his five kids and one with $265,000 in debt for his two kids, who said they wished the system hadn't been so easy to take out loans.
"I wish there were more constraints on it, or something that might have forced me to think twice about it or make a different decision," O'Kelley said. "I wish things would change because you don't want to see other people in the same situation."
The Texas Public Policy Foundation released a report last month showing that for every 100 student-loan borrowers, there are 22 parent borrowers, and for every $100 in student loans, there are about $30 in parent loans.
O'Kelley's wife makes a livable salary, and combined with his own, he's not too worried about making monthly payments once the pandemic pause lifts in February. But his wife is planning to retire in just a few years, and that's when the $760 monthly payments will "become an issue."
Still, even with the financial burden it brings, O'Kelley isn't sure whether he deserves student-loan forgiveness because it was his choice to take out the loans. But he said the huge debt loads that so many people hold is a "hindrance on the economy," and more oversight would lessen its negative impact.
He said loan forgiveness is a "moral issue" to him as he knows he chose to spend money on his son's education, "but somewhere in the back of my mind, it's always been a hopefully fingers-crossed thing that maybe Congress will do something."
Do you have a story to share about student debt? Reach out to Ayelet Sheffey at [email protected].