<p>Our income is over 100k however our debt is great. Good credit, just too many bills and nothing in savings to send our kid to college. The plan is to pay for some of it as we go but the majority will need to be borrowed. We applied for the Parent Plus loan and have signed the MPN. Is this really the best option and when will I know if it's actually gone through? The whole process seems strange to me that I cannot see a status update of our loan request. Should I assume all is well or look at other options? Would we be better off to co-sign a CAL loan and help her pay the loan? </p>
<p>I hope someone can enlighten me and point me in the right direction.</p>
<p>Thanks!</p>
<p>From what I understand, you’re automatically approved for the plus loan. MPN just confirms you accepting the loan. The amount doesn’t really matter(if i’m not mistaken?), however payments will start immediately and will be billed to parents. The interest rate is based on the government issued apr.</p>
<p>Private loan, student takes it out, but parents serve as cosigner. Limited in how much you can take out(depends on what the school puts on the financial aid package, and by parent’s income). Interest is dependent on parent’s credit(which can be lower than the government decided APR) Student received first bill after 6 months from graduating. Interest accrues on loan, but can be avoided if student makes payments while in school.</p>
<p>I don’t think people are “automatically accepted” for a Plus Loan. People with bad credit are not accepted. </p>
<p>However, the OP sounds like they have decent credit so they probably will be approved.</p>
<p>But, keep in mind that you’ll be borrowing every year (not just this one year) and the debt can get huge. You may not qualify for one of your child’s later years in college since at that point you’ll have borrowed a lot. Then what will your child have to do? Leave school? Go somewhere cheaper and get their degree at a local public? If so, it may be better to start at the local public and then get the degree from the more expensive school.</p>
<p>Also, if you have younger children to borrow for, then how will you borrow for them as well when you have this child’s outstanding debt?</p>
<p>Is your child’s school expensive? Are there less expensive options?</p>
<p>when you apply for it - it runs a credit check and approves you. when you sign the mpn you are approved.</p>
<p>the plus loan should be applied to your child’s account soon but you don’t begin pay back until it’s paid out which is end of second semester. in the mean time you are borrowing that money interest free.
if you want to know if it went through for sure call your childs financial aid office, but it should be instantaneous (or nearly).</p>
<p>keep in mind, your child will probably be in college for four or more years. all those plus loans can really add up.</p>
<p>If you are signing up for PLUS loans, I assume that you have taken the maximum in Stafford loans also. It may be in different names, but at the end of the day it all has to be paid back.</p>
<p>Also remember, taking out a lot of loans could curtail credit for other purposes (car, house etc. as your debt service will be high) down the road.</p>
<p>
Is that really true? I don’t have any experience with PLUS loans but I had never heard that no interest accrues until the end of the second semester. Almost sounds to good to be true. I thought interest started accruing and you had to start repaying the disbursed amount as soon as it paid out.</p>
<p>edit: I checked on my daughter’s school FA web site. According to them the interest starts to accrue as soon as the first disbursement of the PLUS loan is made so it is not interest free at all but starts incurring interest immediately. The repayment starts 60 days after the full disbursement of the loan. At my daughter’s school the 2nd disbursement of the loan would occur in January (this will vary by school) so repayment of the loan would begin in March. But the interest would be accruing all along. Can’t figure out if it would just be on the initial disbursed portions until January (I would certainly hope so) then on the whole loan from January.</p>
<p>I just noticed the OP’s screenname. </p>
<p>Does that mean that you have 4 children to put thru college? If so, borrowing for the first is NOT a good idea unless you’re borrowing so little that you can quickly pay it back and won’t be borrowing for each additional year of college.</p>
<p>If you will be borrowing amounts over the next 4 years that will take you several years to pay back, you won’t have any borrowing power or any ability to help pay for any younger kids’ college costs because your “extra” money will be going towards debt for your older child’s college loans.</p>
<p>Another parent on CC is in this situation. Sometimes we get so focused on getting Child #1’s college paid for that we forget that the impact of loans will negatively affect the next child(ren) that go to college.</p>
<p>if you can’t afford to take on loans for each child’s college costs, then it’s probably not a good idea to start now if there are cheaper alternatives for college.</p>
<p>however, if none of this will be a problem for you, then great. :)</p>
<p>swim - you’re right! The interest on the PLUS loan starts as soon as the 1st semeter portion is disbursed ( I can show you my statement) - not the “whole year amount” just what was disbursed. The rest of the interest is added when the 2nd portion is disbursed usually in Jan.</p>
<p>“Payment” on a PLUS starts 60 days after the second disbursement. Note - you can now defer PLUS loan payments throughout all 4 yrs of college as long as the student is full-time. However, the interest continues to accrue, but if cash flow is a problem now, it might be an option.</p>
<p>I have taken 3 PLUS loans for my 2 kids in the past few years - my credit score actually “increased”. Therefore, I don’t think that just taking out PLUS loans adversely affects your credit score when the credit check is done prior to a new PLUS approval. The Federal Direct Loan service site makes it clear that they are looking for credit problems with late payments greater than 90 days, defaults on loans, mortgage, other debt payments. So I wouldn’t let the # of PLUS laons dissuade you from using these products.</p>
<p>CJ</p>
<p>Hmmmmm - perhaps this has changed. So, do they disburse them in two parts now?</p>
<p>It’s been a while but when I took a PLUS loan out years ago, it was divided into two and not disbursed until the second semester. IIRC - the disbursement was made in Feb/March.
I should have said “into the second semester” not the “end of second semester”.</p>
<p>Agree on CJ’s credit assessment, above.
It’s generally easier to qualify for a PLUS loan than a private loan since this is unsecured debt and the PLUS loan is guaranteed by the Fed Govt.</p>
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<p>The one we took for our daughter was actually disbursed in three parts; she’s on the quarter system.</p>
<p>The first disbursement was made about two weeks after the start of the quarter. Next one, same thing…about two weeks in…and so on.</p>
<p>The school considered the bills “paid on time” because the loan approvals were in place, even though they knew the funds wouldn’t be there until after the quarter began.</p>
<p>According to the FA page at my daughter’s school the PLUS is disbursed in two parts. Half at the beginning of the first semester and the remainder at the beginning of the second. (I am sure actual dates will vary from school to school). I have no personal experience of PLUS loans - so far the only loans have been sub Staffords. Hoping it stays that way.</p>
<p>Thanks everyone for the responses and comments. Yes, we have four children but are four years away from the next one heading to college. Our first daughter will be attending UT Austin this fall so the total estimated yearly cost is about $22,000. Ironically, I just checked her status page on the UT site and there is now an option to pay her tuition bill with her financial aid funds, aka…loans! So, it seems it has all gone through and we are in good standing.</p>
<p>For those of you who share your concern about the mountain of debt we will be incurring, your point is well taken. Trust me; this was not our first choice! However, we strongly feel it’s our parental responsibility and will gladly take on the loans to put her through. Of course, we do not intend to secure loans every year. We just need a jump start right now. I am a tad bit concerned about the potentially adverse effect on our credit score but its simply the way it is. Fortunately, only one of us is securing the loan and we aren’t planning on buying a house any time soon.</p>
<p>I do have a question about the parent plus loans. If we want to begin making payments right away, what is the process and how are the payment amounts calculated? </p>
<p>Thanks again to all who contributed!</p>
<p>As far as I know, you can make payments any time you want. Its a very simple process; you can set up one-time or regular payments on line at the direct loan servicing website</p>
<p>[WWW.DL.ED.GOV</a> redirect page](<a href=“http://www.dlssonline.com%5DWWW.DL.ED.GOV”>http://www.dlssonline.com)</p>
<p>While payments on the loan will be scheduled to start after the final disbursement of the year (two months after, I believe) you can in fact put the whole thing in deferral with a phone call. Payments then won’t be required until after graduation, though interest will continue to accrue.</p>
<p>My DH and I took a PLUS loan for our daughter’s freshman year. The initial payments were to have begun this month, but we have the loan set up in deferral. We’ve actually already paid down 80% of the loan amount in lump-sum payments on-line, which we can do even with the loan in deferred status. </p>
<p>For us, the loans are more a tool for us to bridge some cash flow restrictions we have than a way to pay for college.</p>
<p>For those of you who share your concern about the mountain of debt we will be incurring, your point is well taken. Trust me; this was not our first choice! However, we strongly feel it’s our parental responsibility and will gladly take on the loans to put her through. Of course, we do not intend to secure loans every year. We just need a jump start right now. I am a tad bit concerned about the potentially adverse effect on our credit score but its simply the way it is. Fortunately, only one of us is securing the loan and we aren’t planning on buying a house any time soon.</p>
<p>Hopefully, you’ll have time to figure out a good solution for when #2 goes to college. When child #1 is a senior in college, it sounds like #2 will be going to college the following year, and at that point, you’ll still have much of the outstanding debt from child #1’s college costs. Is that right?</p>
<p>I completely understand the feeling that it’s your parental responsibility and I applaud that. My concern was that how will you meet that same responsibility with the rest of your kids if you’re buried in debt from child #1. I doubt you feel that your responsibility to pay for college only extends to the first child or two. There will be a point where you won’t be able to get more loans.</p>