<p>I am confused over the parent plus loans for our kids. Both are attending a local college and we are unable to get the parent plus loans for them. On their award letters it stated an estimated amount from the plus loans.....which they did not get......but now their money is short for their needs. I read that if parents are denied the plus loans, that the students will automatically receive that amount. Is this true? Should I go back in and have them request the loan?</p>
<p>Parent PLUS loans are not awarded to anyone. It’s just a suggested resource. The college could just as easily have given you the name of the “Lending Tree” as a place to go. There is no guarantee you are eligible for the loan, if you will be approved for the loan. YOU, the parent have to apply for the loan and see what you can get. If you are denied, yes, if your kids are eligible for fedral aid, and the cost of attendence justifies it, they can get additonal Direct loans, about $4-5 more. But none of this is awarded. You have to apply.</p>
<p>You need your FAFSA PIN and you can apply for a Direct Parent loan. You are given an immediate approval or denial. If you are declined, your child is eligible for additional Direct Student funds, and you can call the fin aid office at their schools to make sure that is coordinated. If you are approved, you need to follow the next step directions carefully, and fill out the MPN, the Master Promissory Note before the funds are released to the college. Half will go for the fall, the other half to the spring terms. Any excess funds after the college direct bill expenses (tuition, fees, room/board if in college housing, dining plans) will either be returned to you via the college bursar’s policies or remain in the account or released to your student.</p>
<p>So YOU have to iniitiate the loan proceedings, not the school. It’s up to you, and it’s not a financial aid award but just a suggestion from the school that you could maybe borrow from there if eligible.</p>
<p>* I read that if parents are denied the plus loans, that the students will automatically receive that amount. Is this true? Should I go back in and have them request the loan?*</p>
<p>Yes and no. Yes, if the Plus amount is $4k or less. However, if you were trying to borrow $10k for Plus and were denied, then your child is only given $4k more in loans…not $10k.</p>
<p>How much were the Plus loans?</p>
<p>Your child has to be careful that he doesn’t end up with too much debt. Without the add’l loans, he’ll likely have about $30k in debt. If he adds in another $4k per year from a denied plus, he’ll have about $42k in debt (plus any interest that’s added). That’s a lot of debt for a student.</p>
<p>Thanks you. I understand now. We applied and were denied. I have student loans I’m paying on and my husband is also attending college. I wasn’t certain if the kids had to go in and reapply for the loans for themselves. We are calling the financial aid office as I type. Thanks again for your help, I appreciate it.</p>
<p>The kids were “awarded an estimate” of roughly $5k divided between the fall and spring semesters, without that they are short the necessary funds.</p>
<p>Well, they’ll each get $4k more.</p>
<p>As for being short of funds, $1k or more can be made up with part time jobs during the school year.</p>
<p>For future years, they should try to work full time in the summer so that they don’t need to take on that add’l debt.</p>
<p>they both work part time jobs now and are really just trying to do the college thing on their own.</p>
<p>IMO being denied a Plus loan is the system/universe telling you that 1) the parents have way too much debt to income, and 2) the college chosen is not affordable.</p>
<p>Iron Maiden, that is not true. All it means is that there is something on the credit report that is more than 90 days late to be paid. PLUS does not look at debt to income. As long as you are not behind in an account for 90 days or have a bankruptcy on record, you can get declined. I’ve known people declined due to error on the credit report, a bill that just didn’t get paid, some disputes that are on there, and they have plenty of income, high credit scores and very litttle dept. Then there are those with lousy credit scores, lots of debt and little or even no income and they can still get approved as long as none of those they owe have reported them as late for 90 days to a the credit bureau that is used for PLUS loans. </p>
<p>Also, many of those taking PLUS loans can afford the college just fine, but want the loans for cash flow issues. I live in an area where the per household income is very high and a lot of families have their money tied up in things and prefer to take out PLUS for some of the college costs. </p>
<p>IMO, PLUS should require immediate repayment of the monthly amounts, so that those amounts are considered in the not paid column and the borrowers can feel right away what it’s like to repay those amounts. THe theory behind letting people borrow as long as they are up on their bills is that those who are so responsible should be allowed to borrow regardless of income and past debts. The problem is that often with two parents, the parent who doesn’t have the bills will then start borrowing since income and credit score don’t matter. Ti’s really a wonky system. Some people want to be denied PLUS so that their kids get the additonal Direct Loans and it’s beneficial now to do that since the students get a lower and actually competitive interest rate. Not a bad deal these days.</p>
<p>
With the loan fee of 4.204% & interest rate of 6.41%, Direct PLUS Loans are too expensive as a short-term solution to cash flow problems. See <a href=“http://studentaid.ed.gov/types/loans/plus#what-is-the-current[/url]”>http://studentaid.ed.gov/types/loans/plus#what-is-the-current</a></p>
<p>I stand by my statement. Plus loans are so easy to qualify for if you are denied there is a serious issue. Direct along with Plus loans is way too much debt for a family IMO. The school is too expensive. But do what you want.</p>
<p>Nope, IronMaiden, I 've known people denied who could afford it. Just had a late payment to something foor some reason And I know a dozen or more over the years. Like I said, a $30 department store charge you forgot about the has been sitting there for 90 days or a disputed hospital charge or an error the you have not been on top of in terms of contacting the credit bureau can do it. </p>
<p>And yes, people are taking PLUS because the app is quick and easy I know a lot of people who do. Heck, we did.</p>
<p>That’s all well and good cpt, but the OP stated she’s paying off student loans, the husband is going to college too, the kid’s are trying to do this on their own(i.e. the family apparently can’t afford to help with cash) and they were denied for the parent plus regardless of the reason. Doesn’t sound like a cash flow problem to me. The standard directs plus the extra amount sounds like too much debt to me for 4 years for the students if the parents can’t help with repayment. The family may have to consider finding a more affordable school or switching from part-time jobs/full time school to full-time jobs/part time school or some other plan of attack.</p>
<p>If a parent is denied PLUS, the amount a student can get is $4-5K a year on top of the $5500-7500 in Direct Loans. That’s about $50K in loans for college, provided no other loans are taken. Not great, but if some of them are subsidized, the average interest, especially new rates in effect, make it doable. That is what is available to the family. Whether it is the smart thing to do, I don’t know. Sometimes the questions are way off where a family with a zero or very low EFC is looking into taking out loans going into the 6 figure range for college, and I though I still answer the questions to the best of my knowledge as to what is availabe in the way of options, I pull in my breath. I know many of us do.</p>
<p>But what I wrote in post #8 was a direct refute to Ironmaiden, whose posts I often enjoy, and often agree with. The PLUS has nothing to do with debt to income ratios, nothing at all. The approval process doesn’t even ask or check for ANY income. And there are those who are denied the loan because they have a glitch on their credit report showing something 90 days overdue. I’ve seen it. </p>
<p>Now whether this family should or should not be taking out PLUS, is not something I’m about to make any judgement without more facts There has been a denial of PLUS, so the kids can now increase their DIrect loan amounts and if that makes the difference, though I do agree that is a lot of debt for a 22 year old to have, it might be the best path to take. I know families who have done this and it’s worked out. I’ve rarely seen it work out when the debts are much higher than that, and yes, it is possible to get close to 6 figures on student debt just on the government loans.</p>
<p>FWIW, extra $4000 for freshman/sophomore level of parent denied the PLUS. Extra $5000 for junior/senior level. </p>
<p>it basically ups the loan limit to that of an independent student.</p>
<p>I stand by my statement. Plus loans are so easy to qualify for if you are denied there is a serious issue.</p>
<hr>
<p>Definitely not true. I just had a student who was turned down for a Grad PLUS. When she called, she was told it was due to a ding on one of the credit reports. Last spring, she found out that her old roommates had not paid the “last” gas bill in her name, nor had they forwarded it to her. She contacted the gas company and paid it off. 2 of the 3 credit agencies removed it from her record. The 3rd did not remove it … it was for $50. For this, the student was turned down. She appealed with Direct Loans and was approved.</p>
<p>In fact, it was just announced that the PLUS credit restrictions are slated to be eased up a bit.</p>
<p>Cpt, I think I was not clear. I know the Plus app does not look at debt to income ratio. What I tried to say (badly) is that if a family can’t afford the school without Plus then likely they have other financial issues such as debt to income if they can’t afford to pay for the school. I’ve never seen a case where max Direct / Perkins and Plus is a wise choice. There are cheaper schools. Too much debt. </p>
<p>More often than not a Plus rejection is a result of bankruptcy, a history of late payments, etc. The last thing they need is more debt. Debt is evil, especially for undergrad.</p>
<p>The last thing this country should do is make Plus easier to get!</p>
<p>I am concerned and believe that too much in loans has become a huge problems in families borrowing to send their children to colleges they can’t afford, and for young people borrwing amounts that are going to put them in dire straits rather than helping them get ahead in life. I wish there were some way to dispel the myth that an expensive college education is going to be the putting those who choose that expense are on a road paved with gold right into a life of success. I am cynical about the benefit so these so easy to get loans, and yes, I’ve seen a lot of trouble from them.</p>
<p>But not always. It’s become quite common for students to take out the Direct Loan maximums these days. And for those students whose parents cannot budge from their life styles to pay in what for college, or who have just strapped them selves into a position where they cannot afford to pay, it gives these students the same opportunites that an independent student would have. And it makes sense, as their parents can’t pay in many cases if they cannot even qualify for PLUS. An additional $4-5K is made available per year, still not enough to pay for sleep away college on that amount with out some other source, but just nealry double what the Direct Loans amount are, about what a PELL eligible student could get. </p>
<p>Ideal? No. But if this additonal amount makes some options possible, I think the difficulty in paying back that much more is worht getting. Start throwing more loans in there, and then we are getting to trouble, not to say any loan isn’t a problem. But I think the additonal Direct Loan amounts are not where the warning bells go off. As I said before, it’s when one gets to the point where we’re driving a Mercedes off the cliff each year which is Financed and not insured is truly an issue. </p>
<p>Where to draw the lines in this field of gray? i don’t know. My kids have no loans. We just paid off our PLUS loans from 15 years ago, and I can tell you I felt every dollar. The only reason they are paid off now is because we elected to start payment on them as soon as they were issued. That;s what it took for me to draw our financial lines for our younger kids in terms of college choice. I so wanted them all to have full choices in where to go to school, but we could not afford to do it. But our borrowing 4 years worth of PLUS allowed us to pay for our oldest in a private college of his choice, while still managing to keep the others in their private k-12 schools. Couldn’t have done it otherwise, and even so it was tight as we had some unexpected things happen in that time period. But it’s done and paid for now. </p>
<p>If we’d been smart,we would have had our oldest borrow his Stafford maximus as well as the next one, and saved on interest. But this way, it kept it simple and totally on us, and now it’s a done deal.</p>
<p>My understanding is if you have any late payments in the past 5 years you will be denied for the Parent Plus Loan even if you’re current when you apply. Is that correct?</p>