Welcome to College Confidential!

The leading college-bound community on the web

Sign Up For Free

Join for FREE, and start talking with other members, weighing in on community discussions, and more.

Also, by registering and logging in you'll see fewer ads and pesky welcome messages (like this one!)

As a CC member, you can:

  • Reply to threads, and start your own.
  • Post reviews of your campus visits.
  • Find hundreds of pages of informative articles.
  • Search from over 3 million scholarships.

I need help parent plus loan!!

mimi9210mimi9210 Registered User Posts: 19 New Member
edited September 2012 in Financial Aid & Scholarships
Okay so usually when my parents sign up for the parent plus loan the credit check goes through with no problems, but this time we were declined?? so what am i supposed to do now? can I receive the loan under my name as a student or what?
Post edited by mimi9210 on

Replies to: I need help parent plus loan!!

  • WayOutWestMomWayOutWestMom Registered User Posts: 9,728 Senior Member
    You cannot apply for Parent Plus loan. (You're not a parent and doen't have enough indendent credit.)

    You can contact your college's FA office and ask to have your Stafford (Student Direct) increased. You should be able to get up to another $4000 as an unsubsidized student loan.

    But if this won't be enough, you may have to consider taking a leave of absence while you figure out how to pay for college.
  • swimcatsmomswimcatsmom Registered User Posts: 15,997 Senior Member
    You can't get a parent PLUS loan under your own name. But, if your parents applied for and were denied a PLUS loan, you can get an additional $4,000 in direct student loans if you are a 1st/2nd year student or $5,000 if you are a 3rd year or above..
  • guitars101guitars101 Registered User Posts: 2,253 Senior Member
    do you know why your parents were denied? maybe they can appeal the decision
  • mom2collegekidsmom2collegekids Forum Champion Financial Aid, Forum Champion Alabama Posts: 84,243 Forum Champion
    Have your parents find out why they were declined. Usually it's because of a paying credit cards or mortgage late, since Plus is very lenient with approvals.

    How much were they borrowing?

    Have they been making payments on their Plus Loans or did they arrange so that they would be paying the loans back later?
  • guitars101guitars101 Registered User Posts: 2,253 Senior Member
    to be denied for a parent plus loan the delinquencies must be 90 days or more late. I would talk to your parents and then you can go from there
  • Mark2mMark2m Registered User Posts: 60 Junior Member
    Don't even think of a parent plus loan, no one has looked at the obvious, the finance charge is 4% off the top per disbursement. I have spoken to the school to the govt and bottom line finally got the definition of disbursement (1semester = one disbursement= 4%). Think about it 8% per year + 6.8%.
  • sybbie719sybbie719 Super Moderator Posts: 22,231 Super Moderator
    op said
    Okay so usually when my parents sign up for the parent plus loan the credit check goes through with no problems, but this time we were declined??

    Perhaps, they now have an adverse credit rating based on their debt to income ratio (all of the past parent loans are doing no favors to their credit rating). If both OP and her parents have to take out loans for this school, it is not a financially feasible option for their family. This is going to be way too much non dischargeable debt for both the student and her parents. Perhaps OP should consider taking a gap year and transferring to a more affordable option.
  • mom2collegekidsmom2collegekids Forum Champion Financial Aid, Forum Champion Alabama Posts: 84,243 Forum Champion
    I don't think that Plus uses debt/income ratio or credit scores (altho it SHOULD), which is why low income kids will graduate from schools like NYU and their parents funded it with Plus loans (that the kids are expected to pay back).

    If I remember correctly, Plus really only looks at whether you have things like 90 day lates on your credit history. So, likely, the family got behind on some credit payments. Another issue may be whether the family opted to delay paying the loans back. If they didn't, and they haven't been paying regularly, then that would hurt as well.
  • MommaJMommaJ Registered User Posts: 5,716 Senior Member
    @Mark2m, your information on Parent Plus origination fees is inaccurate, not "obvious". The 4% origination fee on each of two disbursements is still just 4% on the total, not 8%, plus it isn't charged "per year", just once per disbursement. So if parents borrow $10,000, to be disbursed in two equal installments, an origination fee of $200 will be charged when the first $5000 is disbursed, and another $200 when the second is disbursed--that's $400 in total, which is 4% of $10,000. After that, only the 6.8% interest rate will apply to that $10,000 loan.

    Parent Plus loans have drawbacks, but may be the right choice for a family depending on its circumstances.
  • swimcatsmomswimcatsmom Registered User Posts: 15,997 Senior Member
    Don't even think of a parent plus loan, no one has looked at the obvious, the finance charge is 4% off the top per disbursement. I have spoken to the school to the govt and bottom line finally got the definition of disbursement (1semester = one disbursement= 4%). Think about it 8% per year + 6.8%.
    No, this is completely wrong. It is not 8% a year + 6.8%. The 4% origination fee is a one off fee on the amount disbursed (or paid out) at that time, not on the total loan for the year. You do not pay it on money that has not yet been disbursed to you. And the PLUS loan interest rate is 7.9%.

    So if you borrow $20,000 for the year and it is disbursed in 2 equal amounts of $10000, you would pay 4% or $400 on the first disbursement of $10,000 (actually receiving $9,600) and then 4% on the 2nd disbursement of $10,000 (actually receiving $9,600). So in total for the year, you would receive $19,200 of the $20,000 having payed a total of 4% or $800 origination fees. The interest on the $20,000 would then be 7.9% a year (6.8% is the interest on direct student loans - for PLUS loans it is 7.9%).
  • PA-CPA-C Registered User Posts: 960 Member
    Is the parent plus 6.8%? I thought I read it was almost 8%?

    http://www.parentplusloan.com/plus-loans/plus-loan-interest-rate.php
  • swimcatsmomswimcatsmom Registered User Posts: 15,997 Senior Member
    PLUS loan is 7.9%. (see post 11)

    Student direct unsub loan is 6.8%.
  • kelsmomkelsmom Registered User Posts: 15,148 Senior Member
    Your parents can appeal the determination ... have them call. If they are still denied, they can try to get a credit-worthy co-signer. If all else fails, you can get an extra $4000 (fr/soph) or $5000 (jr/sr) per year in unsubsidized Direct Loan.
  • writestuff54writestuff54 Registered User Posts: 266 Junior Member
    The criteria for qualifying for a Parent Plus Loan changed significantly in October 2011, with very little fanfare. It did not have an impact on those already approved for Spring 2012, but did for those expecting Fall 2012 money. In essence, the old rules said that if you did not have bankruptcies, foreclosures or judgements, you qualified. Under the new criteria, collection accounts and charge-offs are also deal-breakers. You can qualify only if you can show that you have paid off these accounts - that is the basis for appeal. Many, many people are in the same situation.
This discussion has been closed.