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.