November 12, 2009

Parent Plus Loan Forgiveness Conditions

Posted in Parent PLUS Loans tagged at 4:41 PM by dbonvie

If you have taken out a PLUS Loan to help pay for your child’s education, all or part of it may be cancelled (forgiven) for several reasons. You may qualify for total or partial loan forgiveness if:

  • The school closed within 90 days of your child’s enrollment and they were unable to finish their program of study.
  • The school did not properly qualify your child’s status before they began studies.
  • You did not receive a refund that was due to you.
  • Your signature was forged.
  • The school did not properly evaluate your child’s ability to benefit from the coursework before beginning studies.
  • You become totally and permanently disabled.
  • If you or the dependent for whom the loan was borrowed, dies
  • Your loan is discharged due to bankruptcy. (Typically, student loans cannot be discharged in a bankruptcy.) Consult your legal counsel regarding your particular situation.

Can I Consolidate My Parent Plus Loan?

Posted in Consolidation, Parent PLUS Loans tagged , at 10:46 AM by dbonvie

Yes, you may consolidate a Parent Plus Loan, but there a few things you should know.

  1. The parent who took out the Plus loan owns the Plus loan for the life of the loan. What I mean by that is you can not have your student, who the loan was taken out for, roll your Plus loan in with their federal Stafford or Perkins loans. The loan is in your name and tied to your social security number.
  2. If you have your own federal loans you are allowed to consolidate your Plus loan with them.
  3. Your fixed consolidated interest rate will depend on the loans you are rolling into your federal consolidation. A weighted average will be taken based on the interest rates attached to said loans.

So what are the Parent Plus loan interest rates that exist today? They vary widely, which is why your friend could have a really low fixed rate while you are stuck in the eight percent rate. Again, your consolidated rate is a reflection of the interest rates attached to your current loans. It is not strictly a market gage, as is the case with a home refinance.

Parent Plus Loan Rates

  • Any FFEL Parent Plus loan taken out after 7/1/06 holds an 8.5% fixed rate, however, if you consolidate that loan there is an immediate interest rate deduction of .25% as the consolidation rate is capped at 8.25%.
  • Within the Direct Loan program Plus loan are fixed at 7.9% for those disbursed after 7/1/06.
  • For all other Parent Plus loans that have not been previously consolidated and which were disbursed prior to 7/1/06 the interest rate is at a historically low level, 3.28%. The previous low was during the 2004-05 academic year when Plus loans were are 4.17%.