Get Out of Debt Guy

My Father Stole My Student Loan Money

Posted February 2, 2015

Dear Steve,

My Dad took out a PLUS loan for me because I had reached the maximum loan allowance from my college as a "dependent" student, even though my parents did not support me in any way. 

He chose the maximum loan amount $18k (YIKES) and ended up using $3k to lease a new fancy car that he couldn't afford. My dad is NOT financially responsible at all. 

He filed bankruptcy recently and I know for a fact that he didn't bring up the possibility of discharging this loan with his attorney. 

I pay for this loan (out of guilt?) and the payments are $249/mo for 10 years. I try to pay more if I can afford it but I have other loans that are actually in my name that I am trying to pay off as well, so I usually just pay the minimum. Anyways, I filed my taxes today and including the student loan interest 1099 for each loan under my name, granted me a refund on my tax returns. 

But I cannot enter the student loan interest that is under my father's name ($1499) on my tax returns even though I'm the one paying it off. 

So I contacted my dad asking him to include it with his tax returns and he says to me "I'm not getting a refund this year as the bankruptcy court is taking whatever I get back. I already filed my taxes and once I receive it I have to turn it over to the courts." And this just really sucks for me. 

It sucks because I've been making the payments, that I can barely afford that are under his name and I can't even get a tax break from it. I get nothing because he filed bankruptcy and the loan is going to remain under his name. I cannot get the loan transferred to my name, and it also cannot be consolidated with my other federal loans.

Am I really just supposed to keep paying so much money towards his loans to get nothing back every year because of his lack of financial responsibility? 

It seems unfair to me. I didn't mind until this whole tax thing. I just don't know what to do.


…Click here to read my answer.

Steve Rhode
WRAL Get Out of Debt Guy

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About this Blog:

Steve Rhode has had careers in opthalmology, real estate and as the head of a nonprofit debt counseling firm. On his blog, he offers hard-won, free advice about getting out of debt, consolidation and making the right choices as you manage your money.