- Robert Pemberton, 64, has $265,000 in loans for his two kids' educations.
- Pemberton told Insider that paying off this debt is pushing back his retirement.
- He doesn't regret taking out the loans, but he said it was a bit too easy to grow all this debt.
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Robert Pemberton was surprised it was so easy for him to take out loans to send his kids to school.
When his daughter and son started college in 2005 and 2006, respectively, Pemberton was on a six-figure salary, but a company merger changed his financial situation and he had to take out loans – about $25,000 per semester – to help pay for their education. Shortly after he took out those first loans, Pemberton was laid off. To his surprise, the government kept letting him borrow money without a salary.
Now, Pemberton's debt load stands at $265,000 and, though he now makes a livable salary as a senior program manager for a computer manufacturer, his debt became unmanageable during a period of unemployment after his kids graduated, and while his wife was battling cancer.
"This 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," the 64-year-old Pemberton told Insider. "I don't know if I'll be able to work into my 80s."
Robert Pemberton
Parent PLUS loans, the type that Pemberton is paying off, are federal loans that let parents pay for their children's education. They can cover the full cost of attendance minus any financial aid the child already received. PLUS loans are the most expensive type of loan, with the highest interest rate.
Each of Pemberton's kids took out about $30,000 in student loans themselves, but PLUS loans make it harder for parents to keep up with payments than a typical student-loan borrower. Also, parents with those loans don't seem to be included in the escalating national conversation about canceling student debt.
He said he doesn't regret taking out the loans, but he wishes the conditions about what he was getting into were made clear to him.
"I don't regret taking them, but I regret not reading closely," Pemberton said. "I was going to do whatever was necessary to get my kids through and get them started in their careers."
'When the bottom drops out, there's no help and lenders just want money'
After Pemberton's kids graduated, he was unemployed for three years while his wife was battling cancer, and FedLoan Servicing - the company that manages Pemberton's loans - allowed him to defer his payments until he found a job.
But even though his payments were paused, interest continued to accumulate, not providing the relief Pemberton hoped for. All the while, the interest kept piling up - PLUS loans now have an interest rate of 6.28% for the 2021-22 school year, compared with 3.73% for undergraduate loans.
Pemberton said FedLoan did not make clear that even though it wouldn't be collecting his monthly payments, it would still be charging around $35 a day in interest. FedLoan recently announced it will be shutting down at the end of this year. Education Department official Richard Cordray - a longtime Elizabeth Warren ally - said servicers were shutting down rather than face increased federal oversight for just the kind of misleading practices Pemberton faced.
Since PLUS loans are based on cost of attendance, parents can borrow money regardless of income, and that type of unchecked borrowing makes it very easy for parents like Pemberton to take on debt without truly knowing what they're getting into. Pemberton described the process as being "on autopilot," and all he had to do was "sign a paper."
To pay for his wife's medical treatment, he cashed out his retirement and pension funds and attempted to pay the medical bills, along with basic necessities, on just his $10-per-hour job part-time job and help from his church. And every day, when he sat with his wife in the hospital, he applied to jobs for hours on end.
"I got up every morning, I dressed like I was going to work, and I sat at the computer and I read jobs boards for six to seven hours a day for nearly three years," Pemberton said. "It wasn't like I was just sitting around being lazy. But when the bottom drops out, there's no help and lenders just want money."
Now, Pemberton is not sure when he will retire and he wishes PLUS loans would become a part of broader student-loan cancellation conversations, given that they have not been mentioned in Democrats' calls to cancel $50,000 in student debt per borrower.
"What about the ones who put their kids through school?" Pemberton said. "I wish I could find an investment or lottery or and just pay it off and be done with my debt."