July 1, 2011
Usually at this time of the year, students have applied for all the scholarships, grants and federal loans they are going to get. There is often a gap between what they have received in aid and what they are going to pay. A last minute option are student loans. Before applying we suggest you do two things: Review our Lenders and compare student loan offers.
Surprisingly, many people are unaware that there are privately funded student loans to help pay for college. In short, they offer students the option of borrowing to cover the cost of education including tuition, fees, room and board as well as other related expenses.
July 30, 2010
Many parents, who take out the Parent PLUS Loan, believe they could always transfer the loan to the child, once he or she has graduated and secured a reasonable income. Unfortunately, that is not the case. The PLUS Loan is the responsibility solely of the parent, and is taken out in the parent’s name. He or she is the borrower, not the student.
One option, if finances become an issue for the parent, is to simply have the student reimburse the parent for the cost of the monthly payment, but continue to make the payments in the parent’s name.
If, as a parent, you would prefer a loan that allows you to eventually transfer the repayment obligation, consider a private student loan. These loans are in the student’s name, and depending on the lender, generally have a cosigner release option. After a certain number of consecutive on time payments, the parent (as a co-signer) can apply to be released from the loan, making it entirely the student’s obligation for repayment.
June 3, 2010
If you are a parent who has taken out a PLUS loan to cover some of your child’s education, you might be wondering what methods of repayment are available to you. While many parents opt for standard repayment, there are other options as well:
The Graduated Repayment Plan allows you to start out with lower monthly payments that gradually increase over time until the loan is paid in full. The required monthly payment is calculated based on your loan debt and interest rate.
The Income-Sensitive Repayment Plan bases your monthly payment on your yearly income and your loan amount. You are eligible for this plan only if you monthly loan payment is greater than ten percent of your annual gross income.
The Extended Repayment Plan provides eligible loan borrowers with payment relief through an expanded repayment term of up to 25 years.
May 6, 2010
If your child received their financial aid award letter and there weren’t enough digits on the page to cover tuition, you are definitely not alone. The cost of college continues to steadily grow every year, but financial aid has not kept the same pace. As a result, the gap between aid and cost continues to grow.
Once your child has exhausted the annual maximum for Stafford loans, the next step is to look at credit-based options to bridge the financial aid gap. Fortunately for you, there are quite a few lenders that all must compete with each other to make money and therefore give you an opportunity to minimize the interest rate on a new loan.
If you’ve read a few posts on this blog, you know the score on Parent PLUS loans, but what about private student loans? There are a few notable differences… and in some cases they can become more attractive than their federal counterpart.
- Private student loans have variable interest rates (meaning they change with the index they are associated with… most commonly LIBOR or the Prime)
- They come from banks instead of the Department of Education
- Many banks offer special incentives to make a private student loan more worthwhile
At the moment, interest rates are quite low due to the Fed attempting to put the economy back on a growth track out of the recession. This means that the indices are at historical lows and with a creditworthy borrower, you can secure a great interest rate that can be as much as 5% lower than a Parent PLUS loan.
If you want to learn more about some of the incentives that private lenders offer, check out this blog on the Student Loan Network.
The bottom line is just do some research before you take out a loan. In many cases, you can save thousands of dollars in interest if you shop around.
April 26, 2010
Getting a loan rejection letter can be very disheartening and exhausting after the work you put into helping your child(ren) pay for their education. However, there are still ways to gain more financial aid through what is called an “appeal” process.
Most schools have these in place and you can get the specific details through their financial aid department. The most common way this process is handled is by sending in proof of income and a formal letter stating exactly where your finances are at, and why you or your child needs more money for school. It is best to do this process as early as possible because as the months move forward toward the beginning of the academic year, the financial aid pie is allocated to students on a first-come basis. Read the rest of this entry »
April 15, 2010
One question we get a lot regarding Parent PLUS loans is whether or not the payments can be transferred to a child. The answer, sadly, is no. Parent PLUS loans are federal-based loans taken out by the parent in his or her name, and will remain so throughout the duration of the repayment.
However, as a parent, there are options if you are unable to pay, or expect you will be unable to pay back a PLUS loan.
If you have yet to take out a PLUS loan, you might be better off applying for a private student loan if you are concerned about being unable to make payments in the long run. With a private student loan, you can apply to be released from the loan after a set number of consecutive payments and have the remaining sum transferred to the student.
If you are parent who has already taken out a PLUS loan, you could establish a payment plan with the student, whereby the parent pays the loan back directly to the lender, and then the student reimburses the parent.
Do you have any other questions about the Parent PLUS loan? Post them in our Financial Aid forum!
April 9, 2010
If your child is in school, or will be entering school, the problematic financial aid “gap” between total cost of attendance and awarded aid can sometimes grow to a frustrating size. From personal experience at a private college in downtown Boston, I averaged about $7,000 to $10,000 in unmet expenses per year that had to be solved through alternate means.
There are a variety of options to handle this extra cost, including private student loans and personal loans, but based on feedback from parents and the economy, the best choice is a Parent PLUS loan. Here are a few reasons why this type of loan is more popular with families putting children through college:
1) They have a fixed interest rate.
In a turbulent and recovering economy, variable rate loans can be a ticking time bomb. Having fixed interest means that over the entire life of the loan, you will have stable payments and no surprises.
2) The credit check is easier to pass.
This one probably is debatable, but there is a general consensus that the credit check for Parent PLUS loans seems to be more relaxed than the inquiry most private banks use for private student loans. There have been many reports of parents who were declined private student loans being offered Parent PLUS loans, with sub-prime credit scores (620+) and higher.
3) They have flexible repayment plans.
This is arguably the best reason to take out a Parent PLUS loan versus a private offering. Between Income Based Repayment and several other very flexible and generous pay plans, the federal loan is a much more attractive option for most parents and families.
March 5, 2010
Attention parents! Today marks March 5, and school financial aid deadlines are here, or very close. The majority of schools require all paperwork to be in during this month in order to fairly distribute financial aid and have plenty of time to assemble students’ award packages.
So, what can you do to make sure it all goes smoothly?
1. Make sure your taxes are filed.
This may be a “what?” moment if you are new to the FAFSA process and/or this blog, but in order for your child or ward to file their FAFSA, they need information from you. Specifically, they need your Annual Gross Income figure from your 1040 or 1040EZ form.
If you are the type to hold off on filing taxes until April’s cutoff date, you are putting the student in a diminished position to get the maximum amount of aid possible for the upcoming school year. If you absolutely must hold off, have them file with the previous year’s numbers and then submit an amended FAFSA as soon as your taxes are complete. You can find all the relevant forms and processes on FAFSAOnline.com.
2. Gently, but firmly remind your child.
Nobody likes paperwork. However, if you and your family need aid money from the government or school to pay for your child’s education, you can’t afford to let the FAFSA sit on the back burner. If necessary, you should put a day on your calendar (in the very near future) to sit down with them and help them complete it; this will ensure it gets done, and is filled out correctly.
If you need any advice, or would like to know more about how the FAFSA works, check out the FAFSAOnline.com blog for lots of relevant and interesting posts.