October 26, 2006
Can Parents use Refund Checks to Pay Off Private Loans…?
I’m not positive about this – if a parent takes out the loan and is qualified, the school receives the funding, but if the money disbursed to the school is in excess of the student’s account, shouldn’t the school cut a check to the student?
Great Question! Although this can be tricky I will do my best to give some more detailed insight…
If there was an outstanding balance at the school then technically speaking, yes, a refund check from the school can be used at the parents discretion and in this could be used to pay off the students private loans. Although, in most cases a school will not certify a Parent Plus Loan for an amount that significantly exceeds the cost of attendance without prior notice that the loan will be used for school related expenses. Typically, an outstanding balance on a Private Student Loans would not be considered a school related expense. School Related Expenses would be such things as books, supplies, housing, and transportation.
If the student’s tuition was already paid and a parent was looking to borrow the Plus Loan just to pay off a Private Student Loan then the school would not certify the loan in the first place. Therefore, the answer to the question would be, NO, you can not borrow a Parent Plus Loan to pay off a Private Student Loan.