PLUS Loan issues

Paying for College
1

<p>Hello,</p>

<p>I'm a single parent who is getting conflicting information about the amount of the PLUS loan I am allowed to receive. In addition to the EFC, I will need to borrow the money for anything my daughter needs for college. </p>

<p>When I originally applied for the loan in April, 2005, the representative from the loan company said it was "absolutely" legitimate to apply for an amount over and above the family contribution amount, in order to buy a lap top, software, virus protection as well as things she'll need for her room. So, I applied for an additional $1,200 for the laptop, software and virus protection and an additional $500 for books and things she will need for her room, and hopefully some clothes. The loan was approved. This represetative from the loan company said that once the first dispursement was made to the school, I should contact the school to let them know I needed to have $1,700 returned to me for those items. He made it seem like it was a routine thing that is done all the time, no big deal.</p>

<p>Well, for various other reasons I won't go into, the first dispursement has not been made yet, and as a result I ended up talking with the Asst. Director of FA at my daughter's college. I'll call him "Big Al." This issue of the "extra" money came up, and Big Al made it clear that getting any amount over and above the EFC was indeed a big deal. Now, I understand that the schools need to certify that a loan request is legitimate, so that people aren't taking advantage of the education loan to finance a new car or summer vacation or pedigreed pooch or whatever. </p>

<p>But talking with Big Al gave me the feeling that I might be the only person who ever needed to do this. And, that the amount I requested to borrow for these items is a bit extraordinary. He asked me what kinds of things she needed for her room - this was AFTER I'd said "Whatever she needs for college, I will have to pay for with a loan." And, my financial information backs all this up, and since they did give my daughter a very generous financial aid package, I know that he knows I'm not making things up here. I mean, I am very broke. I said "All the things that YOUR school sends out saying they need" - he said, "well, that's generated out of the housing office." </p>

<p>He thought that $1,000 for a lap top might be high (although he admitted he wasn't sure about that) and that he'd need to look into it, and commented that she would have access to some computers on campus, and he made it clear that he might not be willing to certify the extra amount, or if so, maybe not all of it.</p>

<p>I have no problem providing proof that I used the money for college related expenses. But I am a bit frustrated that since what I'm asking for (extra money) is needed (that is, that I don't have the money otherwise, and that's not in doubt) and since I'm not asking for an inordinate amount, that he has the right to nickel and dime it with me like this? I mean, I am borrowing the money. The lender approved it. The guarantor signed on. The school's role, as I understand it, is basically to provide some checks and balances so that people at able to abuse the system and use the loans for other purposes. Am I wrong? Am I the only one who has ever had to do this? </p>

<p>And I do recognize that she could get through college without her own computer, but not without difficulty, particularly because my daughter has a brain malformation that impacts her health and requires her to get enough rest, etc. - </p>

<p>Sorry this is so long - any feedback is welcome, I'm quite upset about all of this and worried about providing the things my daughter needs. And I do recognize that she could get through college without her own computer, but</p>

2

<p>zoom I see this is your first post- so first I will steer you to my fave site for finaid information besides CC</p>

<p><a href="http://www.finaid.org/loans/parentloan.phtml%5B/url%5D"&gt;http://www.finaid.org/loans/parentloan.phtml&lt;/a&gt;&lt;/p>

<p>t*Conflicting information about the amount of the PLUS loan I am allowed to receive. In addition to the EFC, I will need to borrow the money for anything my daughter needs for college.</p>

<p>When I originally applied for the loan in April, 2005, the representative from the loan company said it was "absolutely" legitimate to apply for an amount over and above the family contribution amount, in order to buy a lap top, software, virus protection as well as things she'll need for her room. So, I applied for an additional $1,200 for the laptop, software and virus protection and an additional $500 for books and things she will need for her room, and hopefully some clothes. The loan was approved. This represetative from the loan company said that once the first dispursement was made to the school, I should contact the school to let them know I needed to have $1,700 returned to me for those items. He made it seem like it was a routine thing that is done all the time, no big deal.*</p>

<p>Well I don't know which company you are working with- but my understanding that if it is for beyond EFC and what ever tuition loans you have- it is a personal loan, not an education loan.
Her best bet was probably to buy the computer etc through her schools computer office or a refurbished or used computer.
My daughters school even has loaners of older laptops for students use- I understand her need for a computer ( assuming this need is written into her 504 plan?) but there are work arounds.</p>

<p>But talking with Big Al gave me the feeling that I might be the only person who ever needed to do this. And, that the amount I requested to borrow for these items is a bit extraordinary. He asked me what kinds of things she needed for her room - this was AFTER I'd said "Whatever she needs for college, I will have to pay for with a loan." And, my financial information backs all this up, and since they did give my daughter a very generous financial aid package, I know that he knows I'm not making things up here. I mean, I am very broke. I said "All the things that YOUR school sends out saying they need" - he said, "well, that's generated out of the housing office."
I understand having to borrow the EFC- we have to do for part of it as well- however personal items aren't directly for education, and do come with a higher interest rate.</p>

<p>Since summer is half over I don't imagine that it will be easy to find work, but I assume there is a portion that your daughter is already contributing through her summer job and education loans?</p>

<p>Ok I just found this info and it looks like that your daughter can use the PLUS loan to buy a computer.

[quote]
Once all of your financial aid is disbursed and you have a credit balance on your Tuition Account, you may request a refund from the Business Office to reimburse you for the cost of your computer. If you are a freshman, all of the aid will disburse per federal regulations after October 1, 2005 as long as you have completed all of the required paperwork to receive your financial aid. Returning student aid should disburse by the middle of Septem

[/quote]
</p>

3

<p>You need to speak with the financial aid office at your daughter's school. There apparently is a budget they operate by and the approved loan amount is in place. You may need to notify the office, make a letter of request detailing what your purchase needs are and the school will then approve the amount over budget and the loan can be disbursed. Have you asked the school aid officer about the budget???</p>

4

<p>Emeraldkity4 - Thanks for directing me to the site, that was helpful.</p>

5

<p>Thanks, but if you read the original post, you would see that indeed I HAVE spoken to the financial aid office at my daughter's school. That's pretty much where the problem is! Thanks anyway.</p>

6

<p>I think the estimated expenses are very reasonable. It irks me that the financial aid rep seems to be treating you like a second class citizen and insinuating that you are trying to bilk the system. Reminds me of growing up. My mom had 5 kids and a $9,000 income, so some bills were juggled. I remember the lady from the electric company telling her, "People like you should burn candles." Just petty bureaucrats feeling their own importance.</p>

7

<p>Thanks for observing that the amounts seem reasonable, I think so too but after getting "the tone" from "Big Al" I started to doubt myself.</p>

<p>I have heard (directly and indirectly) of comments like "people like you should just burn candles." But that's one of the worst ones I've heard. I can't help hoping that woman is trying to stretch her retirement dollars and finding it difficult to pay the electric bill. Anyway, thanks again.</p>

8

<p>use the plus loan to buy a computer......I know students who have done this. I know of a case where the mother had to submit a request in writing, with the exact dollar amounts: computer, extended warranty, software, messenger bag.....ordered using a finance plan which a family member helped to accomplish and then......the school would approve the amount. The computer was then paid off without finance charges when the plus loan was dispersed. This was a state school and everything for the mother/student was a giant hassle through the financial aid office.</p>

9

<p>well but you still have to pay back the plus loan
My daughter bought an apple computer through apple education and paid it off in 6 months! but now she has a credit record without having to get a credit card. We had no idea that we could have gotten a Plus loan to pay for it- but it worked out the way she did it.</p>

10

<p>Do ALL plus loans begin payback 6 months following dispersement???</p>

11

<p>We are paying back our plus loans from years 1- 2 & 3 now. I believe we could possibly defer it until D graduates but as interest accrues, there wasn't really any point in putting it off.</p>

<p>
[quote]
PLUS Loans
(Loans to Parents)</p>

<p>What are PLUS Loans?
They’re loans your parents can get to pay for your education expenses if you’re a dependent undergraduate student enrolled at least half time. (Click here for a discussion of dependency status.) Also, your parents must have no adverse credit history. As is true for Stafford Loans, there are FFEL PLUS Loans and Direct PLUS Loans. PLUS Loans are unsubsidized.</p>

<p>Can my parents get both a Direct PLUS Loan and a FFEL PLUS Loan for me?
They can apply for either loan but not both during the same enrollment period. Your parents could, however, apply for a Direct PLUS Loan for you and a FFEL PLUS Loan for one of your siblings, for example.</p>

<p>How do my parents apply?
For a Direct PLUS Loan, your parents must complete a Direct PLUS Loan application and promissory note, contained in a single form that you will get from your school’s financial aid office.</p>

<p>For a FFEL PLUS Loan, your parents must complete and submit a PLUS Loan application, available from your school, lender, or your state guaranty agency. After the school completes its portion of the application, it must be sent to a lender for evaluation.</p>

<p>Although it’s not a requirement, parents are encouraged to have their dependent children file a FAFSA, so their children can receive the maximum student aid they’re eligible for.</p>

<p>Are there any borrowing requirements my parents have to meet?
Yes, generally they have to pass a credit check. If they don’t pass, they might still be able to receive a loan if they can demonstrate that extenuating circumstances exist, or if someone they know—who can pass—agrees to endorse the loan and promises to repay it if your parents don’t.</p>

<p>Also, you must meet the general eligibility requirements for federal student aid, and your parents must also meet some of these general requirements. For example, they must be citizens or eligible noncitizens and may not be in default or owe a refund to any FSA program.</p>

<p>Do they need to find a lender?
Not if they borrow under the Direct Loan Program, because we will be their lender. Your school assists us in administering the Direct Loan Program by distributing the loan application, processing the loan, and disbursing the loan funds.</p>

<p>Under the FFEL Program, your parents will need to find a participating lender. For help, they should contact your school or the guaranty agency that serves your state. For your state guaranty agency’s address and telephone number, your parents can contact the Federal Student Aid Information Center.</p>

<p>How much can my parents borrow?
The yearly limit on a PLUS Loan is equal to your cost of attendance minus any other financial aid you receive. For example, if your cost of attendance is $6,000 and you receive $4,000 in other financial aid, your parents could borrow up to—but no more than—$2,000.</p>

<p>Do they get the money or do I?
Your school first receives the loan funds and might require your parents to endorse a disbursement check and send it back to the school. In most cases, the loan will be disbursed in at least two installments, and no installment will be greater than half the loan amount. The funds will first be applied to your tuition, fees, room and board, and other school charges. If any loan funds remain, your parents will receive the amount as a check or in cash, unless they authorize the amount to be released to you or to be put into your school account. Any remaining loan funds must be used for your education expenses.</p>

<p>Can my parents cancel the loan if they change their minds, even if they’ve signed the promissory note agreeing to the loan’s terms?
Yes, they can cancel just as you can. Click here for more information.</p>

<p>What’s the interest rate on PLUS Loans?
The interest rate could change each year of repayment but does not exceed 9 percent. For July 1, 2003 to June 30, 2004, the interest rate for PLUS Loans in repayment was 4.22 percent. Interest rates are adjusted each year on July 1. Your parents will be notified of interest rate changes throughout the life of their loan. Interest is charged on the loan from the date the first disbursement is made until the loan is paid in full.</p>

<p>Other than interest, is there a charge to get a PLUS Loan?
Your parents will pay a fee of up to 4 percent of the loan, just as you would for a Stafford Loan.</p>

<p>When do my parents begin repaying a PLUS Loan?
Generally, repayment must begin within 60 days after the loan is fully disbursed. There is no grace period for these loans. This means interest begins to accumulate at the time the first disbursement is made. Your parents must begin repaying both principal and interest while you’re in school.</p>

<p>How do my parents pay back the loan?
Your parents have nearly all the repayment options that Stafford Loan borrowers have (click here for more information). The only exception is the Income Contingent Repayment Plan, which is not an option for Direct PLUS borrowers. Direct PLUS Loans can also be consolidated. (Click here more information on loan consolidation.)</p>

<p>Are there any tax incentives available for paying back these loans?
Yes, just as there are for Stafford Loans.</p>

<p>Is it ever possible to postpone repayment of a PLUS Loan?
Yes, under certain circumstances, your parents can receive a deferment or forbearance on their loan, as long as it isn’t in default. Generally, the same deferment or forbearance provisions that apply to Stafford Loans also apply to PLUS Loans (click here for more information).</p>

<p>Can a PLUS Loan be discharged (canceled)?
Yes, under certain conditions. A discharge releases your parents from all obligation to repay the loan. (Click here for a list of cancellation provisions.)</p>

<p>Your parents’ PLUS Loan can’t be canceled because you didn’t complete your program of study at your school (unless you couldn’t complete the program for a valid reason—because the school closed, for example). Cancellation also is not possible because you didn’t like the school or the program of study, or you didn’t obtain employment after completing the program of study.</p>

<p>For more information about loan discharge or repayment, if your parents have a Direct PLUS Loan, they should contact the Direct Loan Servicing Center at 1-800-848-0979, or go to <a href="http://www.dl.ed.gov%5B/url%5D"&gt;www.dl.ed.gov&lt;/a>. If they have a FFEL PLUS Loan, they should contact the lender or agency holding the loan.</p>

<p>

[/quote]
</p>