I’m sure this has been asked before but I couldn’t find specific posts about it using the search function. We applied for a Parent Plus loan and received an overage each semester above the cost of tuition and room and board and fees. I assume this can be used to cover books and transportation costs etc. Based on the costs we’ve calculated there will be some money left over.
What do we do if there is loan money left over after paying these other college costs? Can you give it back or keep it to use for emergencies etc? Does it need to stay in my son’s bank account?
You should look every year to see what the current tuition, fees, room and board costs are and only borrow the amount that you need to pay the bill and have money for books, supplies, transportation.
Parent Plus loans are much higher interest than student direct loans and the origination fee is slso around 4% I think. So it would be better to borrow less with the Parent Plus rather than return it.
But I do believe student loans can be returned within the first few months, I would call the FA office at the school and find out if that is possible with parent plus loans and what you need to do.
You should be able to request a lower Parent Plus loan amount if you don’t need that much. You can borrow up to the full cost of attendance, but I don’t think you have to.
At my D’s school the Parent Plus loan refund is deposited into a parent bank account, not a student bank account.
I believe that student loan refunds can be excluded from assets on FAFSA, I would ask the FAFSA helpline if that applies to Parent Plus loan refunds as well.
Is your child a college freshman? Financial aid usually doesn’t post until 20 days before classes start in a term, so if you need to reduce the amount of the Parent Plus loan you might still be able to.
To reduce parent plus borrowing, see if you qualify for claiming AOTC next year on your tax return, have student exhaust all federal student loans first and work a part time job on campus and during summers.
Payment plans might also help spread out the payments over several months.
Waive college health insurance if possible, rent or buy used books versus buying new.