<p>Contrary to some statements that I’ve seen on this board, parents don’t need income to take out a PLUS loan. Think about it as the risk that the federal gov is taking to see needy students through college.</p>
<p>Parents will need reasonably good credit though.</p>
<p>In the old days families had a lot of kids. When a new baby arrived they used to look at it as two more hands to work, not just one more mouth to feed. Unfortunately that thought is lost in modern america.</p>
<p>When a parent takes out a PLUS loan it is conceivable that the beneficiary (darling son or daughter) would help pay it back. Of course, there is no such contract. But surely blood is thicker than water. Eventually everything works out.</p>
<p>Student loans are discharged when either the parent or student dies …</p>
<p>True, but if a parent has no income I think the probability of them meeting the credit requirements would drop sharply. The probability of a sane, rational adult agreeing to take on student loan debt for a child when they have no income to support themselves is even lower, especially if another alternative (gap year, less expensive school, etc.) can be found. Of course there are many parents who aren’t exactly rational when it comes to their offspring…but what does that say about the offspring who would ask that of their parents?</p>
<p>With the unemployment rate for 18-29 year olds currently around 39%, I don’t think counting on the student to pay the parent loans in addition to their own loans is very realistic.</p>
<p>I also would be concerned that a parent w/o income might qualify for the first year’s Plus loan…BUT…since making payments would be difficult, it wouldn’t be surprising if the parent couldn’t qualify for the additional loans that would be needed for years #2, 3, 4. </p>
<p>I’m still amazed that some parents would even consider taking out a Plus loan if they had no income. Blaw, you say that your dad has good credit. Why would he want to risk his good credit by borrowing money that he can’t afford to pay back.</p>
<p>I believe Stafford and Perkins loans…in the STUDENT name only are discharged only IF the student dies. The parent has nothing to do with these loans.</p>
<p>Parent Plus loans are in the PARENT name…not the student’s name.</p>
<p>Federal Parent PLUS loans are also discharged if the student dies even though they’re in the parent’s name. Good to know, but who would take out a loan on that basis?</p>
<p>PLUS loan payments can be deferred while the student is in school and up to 6 months after that. They can also be deferred if the parent is in school. But the interest keeps on building, of course. I think that if your dad is sure he can cover his living expenses until he can find employment again he might consider this as an option. I would not expect him to take large loans until he’s on more secure ground though and only he’ll know if he can pass the credit requirements.</p>
<p>Good to know…but not a pleasant alternative!!</p>
<p>Another question then…I KNOW that Stafford and Perkins loans cannot be discharged if there is bankruptcy declared. Does this apply to the Parent Plus loan too?</p>
There was actually a poster last year(or the year before maybe) that this happened to. She had posted previously on CC when her child, who had a very low EFC, was accepted to an OOS school and the FA package fell well short of meeting need, which I think came as a shock as it so often does. Mom was determined to send her child to her dream OOS school despite it meaning she had to take out parent loans that were very excessive for her income. Everyone here cautioned against taking out such high loans. Subsequently she came back asking what alternatives she might have as she was turned down for loans the 2nd or 3rd year because her existing loans were too high for her income level and she did not know how to keep her child in the OOS school. I don’t think we ever heard what happened in the end.</p>
<p>I remember a post like that - that’s what moved me to write the above warning. I don’t think the mom ever posted the result, but something tells me that her child didn’t get to continue at the school…unless the child took a Sallie Mae out. Now, the Sallie Maes have changed…I think they now require interest payments to be made while in school. That would not be possible for many kids to afford.</p>
<p>Mom was determined to send her child to her dream OOS school despite it meaning she had to take out parent loans that were very excessive for her income.</p>
<p>I think there is such a pressure during senior year of high school to send your child to a school that is similar to where his/her peers will be going, that some low-income parents don’t look ahead to determine how they will pay for those later college years. My SIL is buried in debt because she wanted to send her D to a pricey private because another niece would be going to one, too. Of course, that other niece comes from a 7 figure income family, while my SIL has a lowish income.</p>