"Ramsey's answer cut through the moral confusion. "I would debt snowball it. Smallest to largest minimum payments and knock out the smallest one first and put these $150,000 in parent plus loans right in there wherever they fall," he advised. Then came the urgent math: "The longer you let this hang, those parent plus loans have a higher interest rate. The longer you wait on this, it's going to balloon to $175,000.""
"When Interest Costs $13,000 Annually Parent PLUS loans carry a fixed rate of 8.94% for the 2025-2026 academic year, according to Federal Student Aid. On a $150,000 balance, that generates $13,410 in annual interest alone. Without aggressive principal reduction, the caller's family would pay over $25,000 just in interest over the next two years while the balance climbs toward Ramsey's $175,000 projection."
A household carried $170,000 in combined student loans on a $91,500 salary, having eliminated credit cards and owning their car outright. The individual faced choosing between $20,000 in personal student debt ($13,000 federal, $7,000 private) and $150,000 in Parent PLUS loans taken by parents. A debt-snowball approach was prioritized: pay smallest minimums first, eliminate the $7,000 private loan, then the $13,000 federal loan, then tackle the Parent PLUS balances wherever they fall. Parent PLUS loans carried an 8.94% fixed rate, producing about $13,410 in annual interest on $150,000 and risking balance growth toward $175,000 without aggressive principal reduction. Momentum and psychological progress were emphasized over strict interest-rate optimization.
Read at 24/7 Wall St.
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