October 28, 2009

Do I Need to Complete the FAFSA for My Parent Plus Loan?

Posted in FAFSA, Parent PLUS Loans tagged , , at 3:00 PM by dbonvie

Parents must complete a Plus loan application and Master Promissory Note to be eligible for a Parent Plus loan, but completion of the FAFSA may not be required. Parent borrowers only need to complete a FAFSA if the school the child is enrolled in requires it.

A parent may obtain additional loans for the same dependent student based on the original MPN for up to 10 years from the date the parent first signed it.

October 27, 2009

Parent Plus Loan and the Death of a Parent

Posted in Parent PLUS Loans tagged at 10:36 AM by dbonvie

One of the most devastating things in life is losing a loved one. I lost my Dad earlier this year to a terminal illness, and it was the saddest day of my life. To make matters worse for some grieving students a parents death in the middle of the school year impacts their financial aid, and in particular, the Parent Plus loan.

Parent Plus loans are generally taken out for the entire academic years (fall and spring) just before the fall semester begins. The funds are then sent to the school in two disbursements. One disbursement is applied in the fall and the other is applied in the spring. If a parent passes away during the fall semester the second disbursement must be cancelled as a borrower can not take out additional funds after death.

However, the first disbursment as well as any other Parent Plus loans the borrower had previously taken out would be discharged.

October 22, 2009

Parent Plus Deferral Has Repercussions

Posted in Parent PLUS Loans tagged , at 1:07 PM by dbonvie

One of the big changes in the world of federal loans over the past 18-months impacted the Parent Plus loan repayment time frame. It had always been that repayment on a Plus loan began once the loan was fully disbursed, however, that all changed in 2008.

Plus loan borrowers now have the option to defer repayment for as long as the student is enrolled in school half-time or greater. In addition parents enjoy an additional six months of grace from the time the student ceases to be enrolled at least half-time. There is one downside, however, the loan value keeps climbing.

The Plus loan begins accruing interest from the moment it is disbursed. It is advisable to make at least interest only payments if you are able during this deferral state, otherwise the loan will continue to capitalize each quarter inflating your loan balance considerably.

Talk to your lender about interest only payments while your child is in school.

October 21, 2009

3 Parent Plus Loan Eligibility Requirements

Posted in Parent PLUS Loans tagged , , at 10:50 AM by dbonvie

For any parent wishing to take out a Parent Plus loan to help fund their childs education there are three qualifications that all MUST meet.

  1. You must be a U.S. citizen or eligible noncitizen
  2. You must not be in default on any federal student loan
  3. You must not owe a refund on a federal education grant

Assuming you are a U.S. citizen who is not in default with a federal student loan or owe a refund on a federal education grant you must then pass the credit check, though the standards of credit have dropped significantly over the past 18-months.

October 16, 2009

Why Parent Plus Loans are the Right Choice

Posted in Parent PLUS Loans tagged , at 8:18 AM by dbonvie

In today’s uncertain world where every dime counts and most are on a tight budget the Parent Plus loan makes good economic sense as it provides a fixed interest rate for its borrowers. That is an important benefit to note because most private student loans, which parents co-sign for their students, are variable interest rates. Wouldn’t you rather have the piece of mind of knowing what your monthly payment will be? Private student loans fluctuate with the market – Parent Plus loans do not.

So while private student loans may offer you a lower variable interest rate now, it may be worth it to take out a Parent Plus loan which holds a higher fixed interest rate to protect yourself later.

Parent Plus Loan Application

October 15, 2009

Independent Students Have Options Beyond the Parent Plus

Posted in FAFSA, Parent PLUS Loans, Private Loans tagged , , at 9:27 AM by dbonvie

The Parent Plus loan is a great option for parents to help their children with the cost of education, however, if your student is 24 or older they are viewed as an independent through the schools eyes which means the Parent Plus loan option is not a viable one. However, that certainly does not mean that your student is out of loan options.

If your student is viewed as independent the next best loan option is a private student loan which isn’t the worst thing. Actually, in some ways this loan alternative actually helps the parent because the parent is listed as the secondary borrower on the loan and not the primary. With the Parent Plus loan the parent is the primary. Interest rates are also at historic lows making this a great time to take out a private loan. In addition, repayment does not begin until after the student graduates.

APPLY for a Private Loan Today!