<p>Parent PLUS loans are like car loans, it is a necessary evil. If you can afford it, borrow from it, if you cannot afford it, don’t do it. Like car loans, its matter of personal preference.</p>
<p>I know people who pay their kids’ tuition with credit cards and will be paying them for a big long time. A Parent PLUS loan is a much better route than that because the interest rate is a third the credit card interest rate. </p>
<p>I also know a family where the dad took the Parent PLUS loans and passed away a few months after his daughter graduated. That loan was then gone. They didn’t go after the estate for it or anything. </p>
<p>In some circumstances, it is the best thing to do.</p>
<p>Edited to add: The family whose father passed away didn’t know he was that sick- he was on disability, but they didn’t think he was anywhere close to dying so it isn’t like they purposely used that to their advantage.</p>
1 Like
<p>I can’t believe the estate wasn’t liable. I have heard of cases where the STUDENT died and they went after the parents for the loan. Terrible.</p>
<p>That might happen with a private loan, but not with a PLUS loan. A PLUS loan can be discharged if the student dies, or if the borrower dies or becomes permanently disabled. See: [Forgiveness</a>, Cancellation, and Discharge | Federal Student Aid](<a href=“http://studentaid.ed.gov/repay-loans/forgiveness-cancellation#im-a-parent]Forgiveness”>http://studentaid.ed.gov/repay-loans/forgiveness-cancellation#im-a-parent)</p>
<p>Does the parents plus loan money go directly to the school or can the parents have access to it?</p>
<p>Good article. </p>
<p>It would have been nice to see a column in the chart with the total number of students (or undergrads) at the school to see the % of students whose parents are taking these loans. </p>
<p>For example, NYU had 4262 loans/22498 undergrads = 18.9% with $27305 average amount! (should grad student numbers be included?..don’t know if parent plus loans are taken out for grad school)</p>
<p>It would be good to see total ‘family’ debt acrrued over all years in undergrad by school.
NYU average student indebtedness at graduation is $35K (from college board). So the full family debt must be way higher.</p>
<p>I just can’t imagine that the education received is worth having these large loans. The drag of these loans on our future economy growth is going to be tremendous. This is going to affect us all.</p>
<p>milk and sugar - I agree that your decisions are your own, and if the PLUS loan was the closer in terms of making the education possible, well, then that is perfectly fine. But you also mention you are paying the loan back. The problem is that PLUS loans in general are beginning to have exceedingly high default rates. So from a programmatic perspective it makes sense to tighten up credit standards. Taxpayers end up paying for these defaults. Enacting changeis difficult because any alteration to underwriting standards seems to almost instantly impact the most vulnerable schools - including unfortunately HBCU’s. We learned some hard lessons (which we already should have known) about the perils of cheap credit during the mortgage crisis. We are repeating the same mistakes in the student loan arena (and those mistakes go well beyond PLUS loans).</p>
<p>Parent Plus money goes directly to the school. It’s not vacation money. ;)</p>
<p>
</p>
<p>How can a disabled person borrow from Parents PLUS loan? Is there a loan qualification?</p>
<p>I’m glad I read that.</p>
<p>Great Thread! Our Govt. loans banks that are too big to fail money at zero interest and charges students and parents almost 8% … SHAMEFUL!</p>
<p>this whole thing with borrowing and debts is out of control. Tuition keeps going up because students.families will pay whatever price if they dont mind the debt. We dont live in debt (only house payment). Didnt have enough money for elite schools they got into at $50K so went to state schools. I do regret not getting a loan and giving them the best but they are ok. One son did have to take a student loan since he lost merit aid but that was his consequence and needed to learn. If the gvt. decides to bail out and forgive any of these students loans then I may just have to move out of America cause I’m tired of paying for stupidity. I beleive in consequences and everyone needs to pay back their loans. (I just know someone who does not pay their taxes, whines about money, but took out a loan to send their child out of state for a non-sense degree…seriously, the student could have started at a community college for general ed. ). </p>
<p>The entire process is scary. My son is graduating from HS in June and has his heart set on a private out-of-state school to the tune of $34k+ per year. My husband and I demanded that he applies to 2 other schools similar to the one he wants to go to and a few in-state public schools. So far he has been accepted into 2 of the schools - one being his top choice. At this point we are waiting for scholarship responses and the schools’ award letters to assess the best choice for him academically and our family financially. Unfortunatley we were not in a position to save a lot of money for him over the years; however, we both have good professions now and make decent incomes. Our approach is to budget to pay his tuition without taking out any Parent Plus or private loans along with allowing him to take out the Stafford loans. This way when he graduates we will not have any debt and if it takes time for him to secure a job we can help him with his loans. I’m 48 years old and my husband is 53; therefore, we refuse to be strapped with student loans heading into our golden years and planning for retirement. If it means we have to eat rice & beans for 4 years and sacrifice the extras - I’d prefer to go that route. BTW - we’ve also told him if he goes to community college for 2 years to do his general studies we’ll pay everything in full (both 2 Jr. college years and 2 final years at 4 year school) that way everybody will come out completely debt free! I think these parent plus loans are the “new subprime” of our economy and I’m one that can afford to pay it back. </p>
<p>
</p>
<p>Does that include room and board?</p>
<p>How can a disabled person borrow from Parents PLUS loan? Is there a loan qualification? </p>
<p>No bankruptcy. Approved.</p>
<p>That ‘no bankruptcy’ isn’t true. I know a parent who wasn’t approved based on credit score. No bankruptcy, has a job, just bad credit. Child got the ‘extra’ Stafford amount. </p>
<p>But disabled persons can borrow if they otherwise meet the criteria. They can use their disability income as income. They can’t then claim they are disabled and need the loans forgiven.</p>
<p>^ And conversely, my ex somehow managed to get approved WITH a recent bankruptcy. I can only assume his wife was excluded from the bankruptcy and co-signed the loan for him, as he has no other family in a position to co-sign.</p>
<p>My ex-husband and I took out two smallish PLUS loans for our older daughter - she graduated 2 years ago and they are already paid off. I think it can be very tempting to get into debt that is over your head when you have a child who has a dream and they are setting off on the path to achieving that dream, but you do have to keep your feet on the ground and consider what you can actually afford.</p>
<p>The couple of problems with Plus loans are these:</p>
<p>1) families who agree to take them out with the “promise” that the child will pay them back…and then the child can’t/won’t pay them back. This becomes a huge problem for the lowish income family who was just trying to help their child, but now is stuck with unaffordable loans.</p>
<p>2) families who agree to them out of desperation, it’s April, none of the FA pkgs are affordable, so Plus feels like the only answer other than a CC (which some just can’t swallow). </p>
<p>3) families who find themselves in Situation #2, and resort to Plus to solve an immediate problem, without “doing the math” and realizing that they’re going to face similar problems with Child #2 or #3…yet the Plus for #1 will still be outstanding.</p>
1 Like
<p>I am sure this has been answered a million times, but I can’t track a concise, easy-to-understand answer, so much appreciation to you experienced people (you are amazing with your knowledge and wisdom on many topics). What is the difference between a “Federal Direct Unsubsidized Loan” and a “Federal Direct Parent PLUS Loan” and a “Stafford” loan? ALSO, my husband is self-employed for the last two years after employer shut down after a few bad years and declining pay, all that following serious health issues/costs, house underwater due to economy. Our excellent credit of 25 years has been dinged badly, even though we’ve kept up on things overall. Will credit rating matter in even getting such loans? I have pasted below an “offer” from a school (all loans it appears, unless some merit comes in later). I just need some basic help on this We have a HS sophomore, as well. This “offer” would just be for freshman year. We don’t need this much in loans, but probably $10,000-$20,000 each year depending on the school.</p>
<p>Fed Direct Unsubsidized Loan Offered Fall 2014<br>
$2,750.00</p>
<p>Offered Spring 2015
$2,750.00</p>
<p>Fund Total:</p>
<p>$5,500.00</p>
<p>Fed Direct Parent PLUS Loan Offered Fall 2014<br>
$27,115.00</p>
<p>Offered Spring 2015
$27,114.00</p>
<p>Fund Total:</p>
<p>$54,229.00</p>