Understanding PLUS loan rules, denials, options

Paying for College
1

<p>I hate student loans. I spent 20 years with defaulted student loans on my record, until I reconsolidated them a couple of years ago. It has been my goal for years for my children to not have student loans for school, at least undergrad. My son has been successful with this, but it looks like my daughter isn't going to be that lucky. All of the packages she's been offered so far have included 20-30K in student and parent loans, even though we have an EFC=0. We're going to pursue negotiating financial aid awards based on our situation. I'm also aware of other options -- gap year, community college, etc -- but my daughter is ultimately the decision maker, and she is starting to weigh options for loans. </p>

<p>Anyway, I have crappy credit. I'm a full-time student, so I don't have employment information. It appears that I will probably be denied PLUS loans for my daughter. That's probably not a bad thing, because I am a <em>horrible</em> loan risk. I know this, my children know this -- that's why my daughter would rather not have me involved in her financial aid award. Over at finaid.org, I found the following information: </p>

<p>"If a dependent student's parents are denied a PLUS loan, or the college financial aid administrator determines that the parents are likely to be denied a PLUS loan, the student becomes eligible for increased unsubsidized Stafford Loan limits. Only one parent needs to apply for and be denied a PLUS loan. However, if one parent is denied a PLUS loan and the other is approved for a PLUS loan, the student is not eligible for increased Stafford Loan limits. </p>

<p>It is generally a good idea for parents who think they might be denied a PLUS loan or have other exceptional circumstances that prevent them from using the PLUS loan program to talk to the school before applying for a PLUS loan. If they happen to obtain a PLUS loan approval it makes it much more difficult for the school to grant the student the additional unsubsidized Stafford loan eligibility."</p>

<p>I also understand that come July it may be easier for me to get PLUS loans, which may not be a good thing, if the goal is for her to get an increased Stafford limit. So, questions: </p>

<ol>
<li><p>Is there a way to prequalify without knowing which school daughter will be attending? We're having to evaluate this <em>before</em> choosing a school. </p></li>
<li><p>Any ideas on working with schools about this issue? </p></li>
</ol>

<p>Again, I am very uncomfortable with my daughter having <em>any</em> loans, but I've told her that right now, I'm at least willing to explore the situation.</p>

2

<p>I hope you are not talking about $20-30k for one year. That would be way too much debt. $20-30k for the whole 4 years is not so bad.</p>

<p>The additional Stafford would be $4000. So the max Stafford for a freshman including the additional would be $9500.</p>

<p>I am not sure whether you can “prequalify” or not qualify for a PLUS loan without having committed to a particular school especially with the new bill where future PLUS and Stafford loans will all be direct loans (from the govt and processed through the school, not a private lender). My understanding is that the credit check for PLUS loans is not nearly as tough as it is for regular loans. If you are not turned down then your daughter can not get the additional Stafford. If you get the PLUS are you willing to take it on in your own name?</p>

3

<p>swimcatsmom: Yes, all of the packages she’s been offered so far have 20-30K for <em>a year</em> – the max amounts of student loans, and then big whopping parent PLUS loans. I’ve spent the past two days in hysterics about it, because a couple of the schools offered NO need-based institutional aid at all – not even a penny of grants. Small merit scholarships and loans. (In addition to the full Pell.) That’s it. We expected gaps. We didn’t expect <em>that</em> kind of gap. </p>

<p>So, of course, those aren’t possible. The $9500 figure for the Stafford is interesting to know; I haven’t found that anywhere before. So it looks like schools would have to increase their grant package somewhere around 10-15K for any of them to be possible, even for her. </p>

<p>Would I take a PLUS loan in my own name? Well, I could. Do I honestly think I will be able to repay a sizable PLUS in 4 years? No. It’s more likely that I will just continue having terrible credit, avoiding phone calls, and not having any credit cards or other things for another 20 years, like I did from 1988 or so until 2008.</p>

4

<p>You should not even consider taking out these loans even if you can get them. I think you need to to be firm with your daughter about this. This is not the time to say that she will ultimately make the decision. You are the parent and should be quite firm that you will not take on such a debt and that she must not either. 17-18 year olds really have no concept of what this sort of debt means for their future. You do know. Better than most as you have lived it.</p>

<p>The max Stafford increase a little each year - $5500 for a freshman, $6500 for a sophomore student, $7500 for 3rd and 4th year students with an aggregate maximum of $31000. $31000 is more than enough debt for a young person to start their lives with. An additional $16,000 would take her towards $50,000+ in total debt, more if the interest is not being paid as you go along. $50,000 in debt at 6.8% would be payments of $600 a month every month for 10 very long years.</p>

<p>Unless she gets a major increase in grant aid even this is not going to be enough. She may not think so now but you will be doing her a major favor in discouraging her from burdening herself with this debt. I would have vehemently discouraged my 2 from taking on this amount of debt.</p>

5

<p>swimcatsmom: I am being firm, trust me. On the other hand, options for art schools at the level appropriate for her skills are limited. (That is, there’s not a lot she can learn at places like Academy of Art.) WRT payments, you’re assuming repayment plans not based on income. I know from experience that with the new rules and payment plan options, it’s much easier to get reasonable payments – but then you end up paying them off forever. </p>

<p>I am not okay with any sort of debt. I have been clear about this on a daily basis for years. In fact, we’ve been talking every day for months about how any PLUS loans would make a package unacceptable, because of our financial situation. It appears that for any art school, daughter is going to be offered large PLUS loans. In short, something she has planned for for 6 years is simply not going to be possible. Not this year, not next year. It’s not that she’s not a strong candidate – it’s that art schools don’t usually meet need, endowments are hurting, applications are up and funds are down. She’s already taken all the art that local community colleges offer. She will not attend a LAC or non-foundation year program, any more than a kid who wants to be an engineer is going to “compromise” with culinary school. And she can’t stay here – my agreement with my SO is for the children to live with us until they graduate. </p>

<p>It’s not that we haven’t planned school, or didn’t talk about aid – we’ve been planning and talking for years. She has worked as hard as possible to maximize her chances for good aid packages. She did Questbridge. She’s applied for scholarship competitions. She has no social life at all because she spends every waking moment studying or making art. For whatever reason, that work hasn’t paid off. She’s got wonderful acceptance letters with good to great merit scholarships from 7 out of 10 of the schools she applied to – but even though many of those schools have a reputation of providing some need based aid, there isn’t any for her. </p>

<p>I’m sad and upset, more than she is, because her brother <em>skated</em> through school, always over-achieved, did 1/10th the work she has done – and got to choose between full rides. She is the hard-working, never say quit, determined, focused child, and she’s getting one admit/deny after another. <em>sigh</em> It appears there’s no solution that will allow her to attend any of the schools in question.</p>

6

<p>I appreciate that she is very talented and passionate about art. That said, it seems like the challenges you personally have faced with debt are the perfect examples of why your D shouldn’t go way into debt – and the number of unemployed and underemployed artists is huge. I met a student who graduate from a name animation program last spring, and she is thrilled to finally (a year after graduation) be employed doing some animation and graphics design for the move theater ads for local businesses that play before the movie. I don’t think she’s earning much, and I can’t imagine how she could make a go of it with a lot of debt. She told us at the holidays that quite a few kids from her graduating class still don’t have employment in the field. Lots are waiting tables, working at Starbucks and the like. </p>

<p>Sometimes people have to compromise, and this sounds like it might be one of those times. She needs to find an affordable program even if it isn’t the art school of her dreams. I’ve heard of music students who really wanted conservatory programs who came to the same understanding – only the most outstanding students get even close to full scholarships, and for most families, conservatory costs are simply unmanageable. Kids survive. She will too. Saddling yourself with more debt is not the answer.</p>

<p>Perhaps when her brother graduates he’ll be in a position to help her a little with college expenses since he’s had the full ride?</p>

7

<p>Does your D have any financial safety schools? </p>

<p>Does a CC by your home have a decent art department. At least then she could transfer after a couple of years to minimize debt.</p>

<p>I don’t see how - year after year - you’re going to be able to keep qualifying for more Plus loans. You might get approved for the first year, but what if you’re denied for years 2, 3, or 4??? Then what would your D do?</p>

8

<p>mom2collegekids: She has at least one relative financial safety, but for the most part, art schools are not cheap. As far as local CC’s with art departments, she has already taken the coursework there, and the professors have been clear with her that she should be in a better program. Additionally, she can’t live at home and attend a CC, and the cost of living is very high here, so she can’t afford to live locally on her own. She will have to go live in some other part of the country if she’s not going to college. </p>

<p>I’m not suggesting that I’m going to be able to qualify for PLUS loans, this year or any year. It’s not a question of “Should I do this?” I can’t. Right now, we’re exploring the alternatives, specifically about rules when parents do not qualify. My hope is that she can appeal awards and perhaps get at least some need-based institutional aid because PLUS loans are not available to her.</p>

9

<p>Hi TrinSF, </p>

<p>Not sure what type of art your daughter is interested in going into… fine art, entertainment art, etc. Have you or your daughter considered a local art atelier? </p>

<p>There is one that I am watching with interest as it gears up to go online:
[The</a> Art Department](<a href=“http://www.theartdepartment.org/info.shtml]The”>http://www.theartdepartment.org/info.shtml)</p>

<p>They offer merit-based scholarships and local studio locations on both coasts and Texas. Just thought I’d throw another option out there</p>

10

<p>TrinSF: What about your daughter’s other parent?
In addition to not being able to help you daughter financially attend college are you also saying that you won’t let her continue to live with you after high school graduation?

</p>

11

<p>Pumpkin: She’s very interdiscipinary. She moves between illustration, painting, 3-D work in fiber and fabric, big mural stuff, as well as industrial and toy design. Her work right now includes one of a kind spoke cards, paintings on found materials (cardboard, wood scraps), and some jewelry. She’s designed t-shirts for bands, and painted portraits. She would say that she does some fine art, and some commercial work. She wants to be part of a gallery collective, but also spend some time as a tattoo artist. So, places like SAIC are very good fits for her, most ateliers are not. </p>

<p>(PS: I realize that she sounds very disjointed, but she’s not. She has a very clear style and voice in her work, and I’m confident that she can achieve her goals, just because she’s so determined. But she is not someone who says, “I want to work for Pixar” or “I want to be in museums.” Honestly? I think she’ll end up being someone like Simone Legno. Her favorite artist is Banksy.)</p>

12

<p>aglades: My daughter lives with us because her father has a partner who seriously abused her when she was younger. She doesn’t have contact with him as a result. It’s not a question of, ‘I won’t let her live here.’ I negotiated for the children to live with us until they graduated and went to college. Our household situation will not allow for a change in that agreement now. Anything more of an explanation isn’t appropriate for a public forum.</p>

13

<p>TrinSF: Let me make sure I understand this.
Her father’s partner seriously abused her.
You "negotiated’ with your SO to “allow” her to live with you until she graduates…and then she HAS to leave.
You can’t afford to help her financially with college, your credit is bad and you don’t want her to take out any loans.

Other than you…and your SO…and her father…and his partner, are there ANY family members that she can live with while attending a local college?</p>

14

<p>aglades: I don’t have a close-knit family. I apologize if that seems strange to you. I know a lot of CC posters come from parts of the country or other cultures where it’s more the norm. That’s not really available to our family. I would prefer to focus on the original intent of the thread, rather than entering into a discussion of family dynamics.</p>

15

<p>From a strictly financial perspective, I don’t think she can possibly take out enough in loans to pay for what you describe, even if she gets the (little bit) higher loan allowance available to a student whose parent is unlikely to qualify for a loan. So I don’t see that option as worth spending a lot of time on. (Even if by some chance you qualified for a loan this year, it seems highly unlikely that you would qualify in the succeeding years.)</p>

<p>Could she apprentice with an artist she respects? Work close to full time and take a class a semester at a great art school? Move to some state where there is an acceptable public school with an art program, and work several years to establish residency and then apply?</p>

<p>I don’t think that it is likely that money is just going to show up, so finding a different plan would seem to be critical, particularly if she needs to move out come June? August?</p>

<p>And, if she does go to school somewhere, can she live with you during breaks and the summer, or is she expected to find and finance her own housing during those times?</p>

16

<p>Borrowing that sort of money for art school is not a reasonable option. Art degrees by themselves rarely lead into highly lucrative occupations – so you, or your daughter, would be borrowing tens of thousands of dollars in order to hone a skill that down the line might help her earn a modest living. </p>

<p>What state are you in? Your daughter needs a backup plan, which may involve a gap year. There are ways that she could be exploring and developing her artistic talent over the coming year outside of a formal education, while she reassesses her options and comes up with a more realistic plan for the following year.</p>

17

<p>calmom: I agree, she may have to take a gap year. She will just have to do it somewhere else. The bay area is not an affordable place for an entry-level worker.</p>

18

<p>Actually, my son did pretty well on his own in the bay area when he dropped out of college at age 20 — it did take him a couple of months to save up the money to move out, and he always lived with roommates – but it is do-able. Check Craigslist listings for shared housing. </p>

<p>Assuming you are in California, your d. should look at art offerings at various CSU’s for the following year – many of the CSU’s have very strong art departments, and if you have a -0- EFC then a Pell grant still goes a long way toward CSU tuition. </p>

<p>I second the suggestion of Americorps – there are some arts-focused groups that so rely on Americorps volunteers, so Americorps could also provide a good avenue for your d. to use her creative gifts.</p>

19

<p>hmm, in your case an atelier style art school is probably not what your daughter is looking for. Perhaps she may consider SJSU which has a fairly reputable art program among public schools in Cali. </p>

<p>A smattering of business and marketing training definitely wouldn’t hurt the direction she seems to be going in either.</p>

20

<p>pumpkinking: It’s a really bad time to be at SJSU right now. The budget cuts are increasing and the furloughs mean that students get 10-20% less instructional time, at higher prices. It’s gotten ridiculous. Since several of my classmates are in the art program, I know the problems they’re having. </p>

<p>I agree about business and marketing; she is really keen to take some business classes.</p>