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Read this before you take out a Parent PLUS loan

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Replies to: Read this before you take out a Parent PLUS loan

  • twoinanddonetwoinanddone Registered User Posts: 11,115 Senior Member
    You could do that if you get approved for the private loan. However, is the student also taking the $5500 Stafford loan? That's $15500 for the student for one year, plus $10k for the parents, a huge total for one year.
  • ThreeRedheadsThreeRedheads Registered User Posts: 125 Junior Member
    If the Sallie Mae loan needs a co-signor, then the parents are still on the hook for the debt in the event the student defaults. I like the idea of the creative financing.
  • DVCmemberDVCmember Registered User Posts: 86 Junior Member
    Yes, I see your point @twoinanddone ....I guess I am just trying to "talk out loud and brainstorm" some ideas. Hoping some merit and/or athletic money will come through, but in case it doesn't, just trying to see what could be options. @ThreeRedheads , I would assume the Sallie Mae would need a cosignor. Any other creative financing ideas out there? Lol.....Im new to the process and overwhelmed in reading information, but trying to keep my sense of humor.
  • LucieTheLakieLucieTheLakie Registered User Posts: 3,623 Senior Member
    @DVCmember, do you have any options for your student that don't require taking out so many loans? Maybe a couple of years at a community college with a guaranteed admission to a four-year university or some schools with stats-based merit money?

    College loans are reality for many families, but the more you can do to minimize them, the better in general. Unless your student is headed into a particularly lucrative field, too much debt can limit his choices in terms of future employment, etc. And you need to be careful not to leave yourself little wiggle room should your health or job situation suddenly take a bad turn.
  • mcat2mcat2 Registered User Posts: 5,942 Senior Member
    edited June 2015
    you need to be careful not to leave yourself little wiggle room...
    For us, it was a compromise between burdening our child with too much debt and saving too little for our own retirement. We chose to pay everything for our child's college expenses but not much (like 1/3?) for the continuation of his education after college. This is what we are comfortable with in our financial situation. So this was what we did.

    There will still be the expenses for wedding in the future, and there is no "student loans" for that!
  • TempeMomTempeMom Registered User Posts: 2,505 Senior Member
    And there will always be "unexpected" expenses: teeth that need crowns, a house that needs a new roof, car tires, etc etc every year.
  • rockvillemomrockvillemom Registered User Posts: 6,571 Senior Member
    edited June 2015
    Did my Parent Plus lan aplication today - and the sign in has changed from last year - not the FAFSA PIN snymore:
    To complete a Direct PLUS Loan Request, you will need:

    Your FSA ID
    Parents must log in using their own FSA ID to complete Direct PLUS Loan Requests.
    Use of another person's FSA ID constitutes fraud. Use only your own FSA ID information.

    It took a few minutes to enter all the info and create the new user ID and password used to enter the site and apply for the loan. Just fyi.

    This is the link for the new FSA ID:

    https://fsaid.ed.gov/npas/index.htm
  • BarbalotBarbalot Registered User Posts: 314 Member
    We just discovered this last night while trying to do the counseling for D's direct loan. Could not figure out why we couldnt sign in. It took a while to clue in that we had to create the new ID.
  • ARTCCARTCC Registered User Posts: 39 Junior Member
    From POLITICO: The US government’s predatory-lending program

    America earns $3 billion a year charging strapped college parents above-market interest. “It’s like ‘The Sopranos,’ except it’s the government.”

    http://www.politico.com/agenda/story/2015/06/the-us-governments-predatory-lending-program-000094
  • rockvillemomrockvillemom Registered User Posts: 6,571 Senior Member
    Interesting article - does a good job of pointing out the negatives of the program - and there certainly are some.
  • rockvillemomrockvillemom Registered User Posts: 6,571 Senior Member
    My main concern with the Parent Plus loan is the lack of consumer disclosures regarding future pymts and the cost of credit - there are none. I borrowed $24,000 this week - it took about 5 minutes - with no evaluation of my qualification to repay - and no disclosure to me of what my future pymts will be. I can see very easily how someone could get in over their head.
  • OvertheedgeOvertheedge Registered User Posts: 1,185 Senior Member
    @rockvillemom - They should require parents to complete the same mandatory counseling required of first time student borrowers under the direct loan programs. I too was able to borrow a significant sum within minutes. They dont even ask for income, expenses, etc. - really no qualification whatsoever except having good credit. Blows my mind.
  • rockvillemomrockvillemom Registered User Posts: 6,571 Senior Member
    edited June 2015
    Indeed. I work in mortgage banking. When someone applies for a mortgage - there are multiple disclosures showing the payment amount. I think that is the most striking omission to me - at no point did I have to sign an acknowledgment of what my pymt will be. I calculated on my own that I will have a payment of about $557/month for $48,000 borrowed for two years of college. That's $557/month for 10 years. Not an inconsequential obligation.

    I am paying interest periodically so that the balance does not increase above $48,000. If I can also pay down principal over the next year before required pymts begin - will do that as well.

    I understand what I have borrowed. But it would be so easy to be oblivious given the lack of counseling/disclosures.
  • tpcrd66tpcrd66 Registered User Posts: 375 Member
    Hello all! Does anyone recall if you need to do the MPR and Credit Counseling again if you did it while applying last year? Didn't want to spend the afternoon on hold when I tried to call with a question...silly me!
  • rockvillemomrockvillemom Registered User Posts: 6,571 Senior Member
    Hi - I had the exact same question today. You do not have to do it again if the loan is for the same student at the same university. The Master Promissary Note you signed last year would cover all years for that scenario.

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