parent PLUS loans

[guitars101]

<p>does anyone know what the qualifications are for the parent PLUS loans? I researched a bit online and I cant tell if too much credit card debt would be an automatic denial. Is there a required FICO score to qualify?</p>

<p>If anyone has any experience with this please let me know. THANKS!!!</p>

[guitars101]

<p>***** bump *****</p>

[LasMa]

<p>I don’t think they look at FICO per se, just “adverse credit history.”</p>

<p>

What kind of credit is required for a PLUS Loan?</p>

<p>Eligibility for the PLUS Loan depends on a modest credit check that determines whether the parent has an adverse credit history. An adverse credit history is defined as being more than 90 days late on any debt or having any Title IV debt (including a debt due to grant overpayment) within the past five years subjected to default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off.

</p>

<p>[Frequently</a> Asked Questions | PLUS Loans](<a href=“Parent Student Loans Hub - Articles, FAQ, and Applications | Edvisors”>Parent Student Loans Hub - Articles, FAQ, and Applications | Edvisors)</p>

[mom2collegekids]

<p>They do look at FICO score…</p>

<p>A Parent’s Credit Report and PLUS Loans</p>

<p>*How is credit judged?</p>

<p>Credit scores are numerical indexes based on an algorithm developed by Fair Isaac Company, called a FICO® score. Scores are negatively impacted by events such as late payment, incomplete or partial payments, defaults, and judgments or liens, and range from 300 to 850. The actual algorithm is a trade secret of Fair Isaac, but the following breakdown approximates the weighted values that compose your score.*</p>

<p>Score is based on:</p>

<pre><code>* 35% Payment history

• 30% Outstanding debt
• 15% Length of your credit history
• 10% Recent inquiries on your credit report
• 10% Types of credit in use
  </code></pre>

<p>[Parent</a> Credit Report < Loan Repayment | PLUS Loans](<a href=“Parent Student Loans Hub - Articles, FAQ, and Applications | Edvisors”>Parent Student Loans Hub - Articles, FAQ, and Applications | Edvisors)</p>

[annasdad]

<p>^Wrong.</p>

<p>You’re misinterpreting that web page which, I’l admit, is confusing. What you cited is the heuristic for determining a credit score used for traditional credit decisions. Right below that, it then details the requirements for a PLUS loan:</p>

<p>

What is the required credit score for the Parent PLUS Loan?</p>

<p>Eligibility for the PLUS Loan depends on a modest credit check that determines whether the parent as an adverse credit history. An adverse credit history is defined as being more than 90 days late on any debt or having any Title IV debt (including a debt due to grant overpayment) within the past five years subjected to default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off.

</p>

<p>with no reference in the answer to credit scores, even though that was specifically asked in the question. </p>

<p>finaid.org addresses the question directly:</p>

<p>

How do Federal Student Loans use Credit Scores?</p>

<p>The Stafford, Perkins and PLUS loans do not depend on your credit score. The Stafford and Perkins loans are available entirely without regard to your credit history. The PLUS loan, however, requires that the borrower not have an adverse credit history.

</p>

<p>[FinAid</a> | Loans | Credit Scores](<a href=“http://www.finaid.org/loans/creditscores.phtml]FinAid”>http://www.finaid.org/loans/creditscores.phtml)</p>

<p>Elsewhere in the finaid website:</p>

<p>

The Ensuring Continued Access to Student Loans Act of 2008 extended the 90 days late threshold to 180 days for mortgage payments and medical bill payments during calendar years 2007 through 2009.

</p>

<p>[FinAid</a> | Loans | Parent Loans](<a href=“http://www.finaid.org/loans/parentloan.phtml]FinAid”>http://www.finaid.org/loans/parentloan.phtml)</p>

[mom2collegekids]

<p>Annasdad…</p>

<p>It may be confusing.</p>

<p>However, there have been families who have posted who have said that they do not have late payments, etc, yet their Plus loans were denied for following years because they had too much debt. So, either they’re lying or debt load is taken into acct at some point.</p>

[annasdad]

<p>Okay, I guess anonymous posters on the Internet have more credibility that finaid.org.</p>

[guitars101]

<p>Thanks for posting the information annasdad! I did go onto finaid.org and read the information. I appreciate you searching and finding this for everyone.</p>

<p>mom2collegekids, do you know where on CC people have posted that they had a lot of credit card debt and they were denied plus loans without having late payments? I’m wanting to get more info. </p>

<p>I just want to get as much info now as possible to be able to help our dtr.</p>

<p>thanks all again</p>

[thumper1]

<p>The posts I’ve read here regarding denial of PLUS loans in subsequent years was because of the large volume of LOANS the family has taken…including PLUS loans for college plus other loans. It was not solely because of credit card debt (although certainly that amount was likely included in the assessment).</p>

<p>Simply put…you should not take on such significant loans that your ability to borrow will not happen in subsequent years AND if this will further put your family into deeper debt.</p>

<p>I am going to stick my neck out here. If a family is having debt issues, they do NOT want to add to them by borrowing for college using ANY loans except the Stafford loans which are in the STUDENT’s name (and Perkins which is also in the student name). If your family is struggling to pay bills, WHY WHY would you add to this in four years with the repayment of significant Plus loan debt?</p>

[guitars101]

<p>please no judgment… no one is struggling! NEVER said that we were struggling, not sure where you came up with this opinion. </p>

<p>I simply wanted to know if having cc debt (and what amount) would be an instant denial for the plus loan. </p>

<p>College confidential is a wonderful place for people to ask questions and to have those questions answered by others who actually KNOW the answers. This is not a forum for counseling sessions or for judgement to be passed. Thank you!</p>

[thumper1]

<p>My comment above was not directed to anyone on this thread. It was meant for others who MIGHT be reading here and who do have debt issues. I apologize for any offense I might have created…it was not intended for any specific poster here…just a general warning of MINE. I should have been more clear. I never meant to imply the poster HERE was struggling.</p>

<p>The only important thing for all to remember is that college costs need to be viewed for four years. If loans are to be part of that payment plan, those too need to be viewed for four years…and the repayment needs to be considered as well. </p>

<p>The qualifications for a PLUS loan are MUCH more liberal than the qualifcations for most any other loan I can think of. Many who do not think they will qualify find that they do.</p>

[guitars101]

<p>No worries, thanks for the comments. It’s a stressful time trying to do what is right for our dtr. Please keep the information coming, it can be very useful.</p>

[annasdad]

<p>It seems fair to me to say - if the only loan you can qualify for is a PLUS loan, then you have no business taking on more debt.</p>

[crazymomster]

<p>Out of curiosity, when does repayment on the Parent Plus loans begin? </p>

<p>Thank you.</p>

[emeraldkity4]

<p>After the final dispersement for the year- or so I remember.</p>

[annasdad]

<p>

Repayment</p>

<p>Repayment begins 60 days after the funds are fully disbursed, and the repayment term is up to 10 years.</p>

<p>…</p>

<p>Parents have the option of deferring repayment on Parent PLUS loans while the undergraduate student on whose behalf they borrowed the PLUS loan is in-school and for a six-month grace period after the student graduates or drops below full-time enrollment. </p>

<p>…</p>

<p>Note that since the interest on the PLUS loan is not subsidized, it continues to accrue while defered or in forbearance and is capitalized when the loan enters repayment.

</p>

<p>[FinAid</a> | Loans | Parent Loans](<a href=“http://www.finaid.org/loans/parentloan.phtml]FinAid”>http://www.finaid.org/loans/parentloan.phtml)</p>

[momofthreeboys]

<p>I took a small one out, $3500 one summer when my son “surprised” me and announced he needed to take a summer term in order to graduate on time. I didn’t have any cash to spare and really didn’t want to cash into a money market at it was the height of the market drop. I had the app done and the funds were dispersed in about 2 weeks. I called the college, told them what I was doing and they simply waited for the money. No hassle at all. I paid if off within a month of the summer term ending and it was a great solution for me. I don’t recommend financing college with Parent Plus loans but they can be helpful for a short term smallish cash gap. I think the important thing is to look at college as a four year drain…and it requires planning, especially if you have a #2 in the wings or are going to have an overlap year. Costs can go up, things can change. My advice is if you aren’t looking at a smooth freshman year financially, beware because there are at least 3 more of those “years” coming right on the heels. It’s a crap shoot if freshman year is the most expensive or not TBD what happens with your particular kid. I had a year and a half period of unemployment at the very same year I had overlap kids. Yuck. I’m glad we went “conservative” on the expense for #1. BTW, I was unemployed and had no trouble getting a Parent Plus loan at that time…zero income coming in, but we didn’t have any late payments and we own our home so no mortgage payments. I didn’t expect to get approved and fully expected S1 do do it with the enhanced Staffords, but it worked out.</p>

[jnm123]

<p>Annasdad–There is a time & a place for Parent PLUS loans. I find them a FAR better alternative to a HELOC (home equity line of credit), unless the homeowner has tons of equity in the house to work from. Our reasoning, despite the relatively high interest rate, was the fact that it’s totally separate from any mortgage & the payback terms are flexible & easily changed. And I am hoping that the tax laws for retirement disbursements are changed so that they are not taxed as ordinary income in the year the disbursement is made. A break on that would be nice.</p>

[annasdad]

<p>I didn’t say that there was no time when a Plus loan was inappropriate. I said that if that’s the only kind of loan you can get, you probably shouldn’t be borrowing at all.</p>

[swimcatsmom]

<p>

And I am hoping that the tax laws for retirement disbursements are changed so that they are not taxed as ordinary income in the year the disbursement is made. A break on that would be nice.

</p>

<p>This caught my eye. Is this just a pipe dream you have? Or is it something you have heard is under discussion? My husband is already retired and we are already living off our retirement savings which are from pre Roth days (Roths had come in at around the time or just before he was laid off and we have never been in a financial position since then to do a Roth). Are you thinking there might be something in the pipe line where retirement disbursements get some sort of preferential tax rate like cap gains do?</p>