We do not have a great credit score and some high debt balances due to using credit during a period of long-term unemployment. Other than that, no bankruptcies, liens, etc. Is there a chance that we would be denied a parent plus loan? I am so nervous.
You can probably get a Plus…but free advice…why would you do that? You say you already have high debt, and iffy credit score.
Isn’t there an affordable without loans college on your list?
if you’re worried about being approved now, what’s your backup plan if you’re denied in years 2-4? Did your child apply to any affordable schools?
she will likely go to a PA state school at around $25k per year. we can afford to contribute $6k per year toward that. she is a very good student so i am hoping for some merit. our debt is high due to years of unemployment (my husband) but we are both working now and paying that down as quickly as possible.
Is your daughter a senior??
Hoping for merit? That’s a scary situation. Did she apply to any schools where FOR SURE she will get lots of merit for her stats??? Where did she apply and what are her stats?
What is her major and career goal?
As mentioned, you already have lots of debt…why would you take on more?? Would you or your child be paying back those parent plus loans?
http://www.ship.edu/News/2009/11/University_adds_new_salutatorian_scholarship/
Is she a junior? Will she be number 1 or 2 in her class?
I sure hope you aren’t thinking of borrowing 19k/year. Did you run the NPC?
The PP Loan makes it look easy. But you have to know how you’ll manage repayments. That’s more than having jobs now, when you’re already saddled with other debt you need to pay.
Look at the repayment terms. To lower the accumulated interest, that death trap, many do not defer psymrnts to after grad. The PP starts low (costs at first are only for first year,) but grows. You have to know you can actually afford payments, as that total grows. Not in theory, but for real. For ten years.
As said, any blip can jeopardize qualifying for a subsequent year.
To answer your question. It is my understanding that the Parent Plus loan is very easy to get and only a recent bankruptcy or default on a student loan will hinder your ability to obtain. I don’t believe income or credit score is a major factor.
My DH and I went thru long term unemployment as well. Its now time for DD to go to college and we refused to take out a plus loan, we want to retire, someday. DD had to go after merit and she did. Its not to her dream school but its a great school that we can afford out of pocket without a loan of any kind due to the merit she has been awarded.
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This
Bankruptcy within 5 years, default on a government obligation (student loan, VA, FHA, taxes) or more than 90 days in default on a major debt (like a mortgage). Income and credit score are not factors.
I doubt you will be denied, but if you are your child will qualify for another $4000 in direct loans, unsubsidized. That should be the max in loans for your family ($9k).
OP- what is plan B if the merit doesn’t materialize?
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Good question. The idea of “hoping for merit” is too risky. If merit is needed, then the student needs to apply to at least 3 schools where her stats will FOR SURE (not hoping) get her the large merit awards she needs to afford college. That may mean applying outside of her geographic area since PA schools often are lousy with merit.
The credit check for Parent PLUS is not for good credit - it’s for bad credit. If you don’t have bills in collections, you will most likely pass the check. You can see the requirements here: https://studentaid.ed.gov/sa/sites/default/files/plus-adverse-credit.pdf.
Everyone should be aware that the rules of the game might change effective 2019-2020. The current language eliminates Parent (and Graduate) PLUS loans. That does not mean it will really happen, but it very well could … unless everyone contacts their legislators to voice their opinions. See this: https://www.nasfaa.org/issue_brief_prosper. Because the Act has not been passed & can change before it is, the more voices who speak out, the better.
For purposes of qualifying for a Direct PLUS Loan, you’re considered to have
an adverse credit history if :
•you have one or more debts with a total combined outstanding balance
greater than $2,085 that are 90 or more days delinquent as of the date of the credit report, or
that have been placed in collection or charged off (written off) during the two years preceding the date of the credit report;
or
•during the five years preceding the date of the credit report, you have been subject to a
o default determination,
o discharge of debts in bankruptcy,
o foreclosure,
o repossession,
o tax lien,
o wage garnishment, or
o write-off of a federal student aid debt.
It’s a 5 year look back. If your bankruptcy was just discharged, it will be within the 5 year period. If you (parents) are denied, your child can still qualify for the extra $4-5k Plus loan. That is probably a more reasonable amount to borrow as the maximum per year anyway.