Why do colleges push the Parent PLUS loan above others

cptofthehouse
Sat, 04 Apr 2015 21:44:49 +0000

I believe Sallie Mae processed my loans, 4 of them and 1 was some other entity, some male name involved, but can’t remember. THe bar is very low for any adjustments. THey are very eager to keep default out of the picture. We started paying on the loans immediately,but I can tell you when all 5 (one was simultaneous with another due to 2 kids in college that year) were in payment mode which was for 7 long year, it was miserable and we had no extra money. Then, it lightened up each year as each year’s loan was repaid. It was over 14 years of payments.

A friend of mine who went the cosigned route found that the lenders were very rigid. Any terms of change costs you if they even permit it. Not so with the PLUS loans. Since we had no intention of welching on them and would have only asked for forbearance or change of terms for hardship reasons, we’ likely have been granted any changes in terms. In fact at one time, we considered it because it was that tight for us. That’s why our later kids had cost limits for college. We simply could not pay any more without making some other financial moves that had repercussions that were even worse. We would go over and over the situation.

But none of my kids had loans on their heads, because we paid their DIrect loans as well. It’s better for them to take them out to the max, because the interest rate on them is lower. We took them out even when the young kids’ did not need them and used the to pay down those horrible interest rate PLUS which allowed us to finish up those loans about a year or so earlier. My sons are all loan payment free, which is our college graduation gift to each of them. Each of my sons with outstanding loans in their names at this point will have them paid off according to our will along with any other things owed, before anything else gets divided. We went through our situation and this was the best way to go. However, I think that this year, we shall pay off all of the loans, as we finally are in a financial place where we can do so. We’ll be debt free other than car (1% interest) and mortgage. But there were some very lean years for a while there.