changing my mind & taking out a PLUS loan - experienced and expert advice appreciated

Paying for College
1

<p>this forum has been very helpful to me over the past year - thank you all so much. </p>

<p>as we (D and i) get into the home stretch, i wanted to post again and see if your thoughts could educate me further. </p>

<p>recap: based on advise from my college professor mother (my parents and i are very close and they are a financial support on occassion, so i tend to listen to their advice) i planned on having my daughter do an alternative loan rather than me taking out a PLUS loan to bridge the $7,000 per year gap for her to attend GWU. although D understands that , regardless of the technicality of whose name they are taken out under, these loans are hers to pay back - i plan to be as helpful to that process as i can raeasonably be. (hopefully i'll be able to at least pay the interest as the years progress - and possibly do a bit more than that - a yearly bonus and annual tax return will be thrown at these loans each year - tho i don't know if those will be applied to the principal or the interest?)</p>

<p>so....
i helped daughter apply for an alternative loan last week:
however, having the alternative loan approved at a 10.375% interest rate - with me as a cosigner (and i have an excellent credit rating) - i was BLOWN AWAY by the cost.<br>
taking a $7,500 loan for freshman year would cost just over 22K!<br>
ridiculous.
to be fair - you did try to warn me! :) </p>

<p>so - now i'm reconsidering doing the PLUS loan. </p>

<p>my question now is - am i too late to apply for a PLUS loan?<br>
it's july - was i supposed to apply for a PLUS loan months ago?!
how long does it take?</p>

<p>also - what happens in the application process? what are the steps on you being the online application?
the application process at Citibank took 10 minutes and an answer came back right away - but we have until Sept. 2nd to accept or decline.
is there an accept/decline step in the PLUS loan procedure? i'm hesitant to start the process if you're tied to anything just be starting the process, if that makes any sense?</p>

<p>one more question... </p>

<p>D was approved for a Stafford-Sub., Stafford-Unsub., and a Perkins.</p>

<p>i was under the impression that, having been "given", "approved", or whatever the terminology is - for a Stafford - that there isn't a separate loan application process for that - just the Master Promissory Note and entrance counseling.
but on the website where i was researching the PLUS loan, there are links that say "Apply for Stafford Loan Here".</p>

<p>question: is there a separate application for the staffords?</p>

<p>i know i'm waiting to get directions for the Perkins from the school - they said mid-July. </p>

<p>thank you all for your wonderful guidance in the past - and again today!</p>

2

<p>Phew! Ok, Here’s my info, although you know I am a first-timer at this as well (but a little farther along in the process). I took a $5000 parent plus loan. The application was painless and only took a few minutes. I received the response immediately that I was approved, although they did warn me that the school had the final say. I received a confirmation letter in the mail about a week later from the loan people and the college sent a new financial aid award letter within a week which included the parent loan.</p>

<p>I wasn’t sure how much to take out - I guessed that I would need about $4000, but I consulted with the college and the FAO advised me to pad it a bit because when the loan gets disbursed you can just accept what you want/need (so I can tell the school to just accept $4,000), however it is harder to get approved for more at the last minute. I also had called the school about the process before I started and they told me that it only takes a week to get finalized so I had plenty of time, although they prefer I did it sooner rather than later.</p>

<p>Also, my D has alread filled out the MPN for her Staffords (sub & Unsub), which included entrance counseling. That was all she needed to do. She had to do the same thing for her Perkins loan, but it was a separate MPN. She even missed a few questions on the counseling part but was able to redo the “test”. She called the school afterwards and they said she is all set.</p>

3

<p>Bear in mind that Plus rates aren’t that great either. But better than what the alternative loan costs. The cheapest loans will be in for your D, the Staffords, even unsubsidized, Perkins so she should load up on those before you take on the PLUS. Call the fin aid office to walk you through all of this. Different offices do things differently. We needed a FAFSA for one of my kids’ PLUS loans which set us back time wise as we had to fill out the danged thing. Never needed it before. Also ask if there are any state or DC loans out there for students. I remember when we were at a meeting in Connecticut, we were told that if your kid goes to school there, parents are eligible for a state loan that had favorable interest rates. Ask the school if they have any school loans with better rates. It never hurts to ask, and sometimes money comes back to fin aid that is not yet reassigned. Long shot, yes, but give it a try.</p>

4

<p>We fill out FAFSA each year so having that on file with the college was no big deal. Son 1 takes the Staffords. All he needed to do was go on line where the college suggested, fill in the form and sign the promissary note. S2 just did that and S1 had to do it again because of the change in the lending. I had always declined the PLUS, but S1 decided at the last minute to take classes this summer to graduate on time next spring. We generally save every nickle during the late spring and summer months to fund the college months and his plans while better than creating a year 5 situation made me decide to do a Parent PLUS. It was very, very easy. I called the finaid office and told them what I was doing (because they have to certify the loan and I had declined PLUS) and then went on-line. It took less than 10 minutes (I took $3000) and it was sitting approved waiting for the college. The college several days later certified it and received the funds. I set up an automatic payment from my checking account and got a slight discount in interest rate and it can be paid off at any point in time. There is even a pay-off calculator. The interest rate is higher than if I took a home equity, but this is a personal loan with no collateral that we intend to pay off pretty quickly so it worked for us as a short-term stop-gap and because our mortgage is paid off and conventional home equity would have required an appraisal and a bunch of BS from the bank potentially costing us more than the uptick in interest rate over a short-term. If the cash flow gods are with me I can pay it off a matter of months. We have S1 as a college senior, S2 starting college and S3 waiting in the wings so I was glad to give it ago for a few thousand in case I ever need to take a PLUS again in the future. That was my experience a month ago. Easy and quick. You have to determine the value TBD the interest rate, how much $$ and how quickly you plan to pay it off.</p>

5

<p>We haven’t even started processing our PLUS loans … you shouldn’t have a problem getting the loan in time. </p>

<p>You may have to “apply for the Stafford” by accepting it online; then it will probably prompt you to do entrance counseling & MPN. You won’t know until you try it!</p>

6

<p>thanks so much for all of your insights!</p>

<p>i’ll for sure call GW tomorrow and ask them to walk me through it… ohhh - might go over and post on the GW forum as well… get some local experience too! :slight_smile: </p>

<p>this is all so very detailed, isn’t it!?</p>

<p>missem -
you said, “and the college sent a new financial aid award letter within a week which included the parent loan.”
does this mean that the financial aid package is reconfigured if i ask for a PLUS loan? i REALLY don’t want them reopening her package and reconsidering what they’ve given her… keeping her package intact is the only way she’ll be able to attend!</p>

7

<p>Nothing else had changed, just the parent loan that was added on the award letter so I knew it was officially part of her “financial aid package”</p>

8

<p>I had a similar experience as the above posters. S initially got a financial aid award letter in April which he accepted. Then I applied for the Parent Plus on-line, which was really a breeze, and it said I was approved and the info would be sent to the college. Then we got a letter in the mail from the Parent Plus/Dept of Ed that said we were approved but the college would have the final say. Next we got a revised financial aid letter from the college that looked identical to the first one with the exception of the Parent Plus Loan be added to what was listed on the original award letter. Again, S had to accept all line items and send it back.</p>

<p>The process was relatively easy but the learning curve about financial aid, FAFSA, options for loans was time intensive but worth the effort. S is child #1 so I expect this to be easier next time around. I like the flexibility of the Parent Plus and the fixed interest rate.</p>

9

<p>thanks so much for the info!</p>

<p>i spoke ot the fin aid office today and they were very helpful.
but now i’ve got two more new questions so i’ll call again tomorrow!</p>