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.
October 21, 2009
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.
- You must be a U.S. citizen or eligible noncitizen
- You must not be in default on any federal student loan
- 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
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.
August 28, 2009
With colleges heading back this week, you should have your financial aid already lined up, but it’s the perfect time to start planning for next year.
Let’s go over the basics:
* Fill out the FAFSA as early as you can. Financial aid is first-come, first-served so get your paperwork in early. If you ‘re waiting on a few last 1099s, use your existing paperwork to file early, and file an amendment when everything finally arrives. If you use a tax prefessionsal, they will often file the FAFSA for you for little to no additional charge.
* You need the FAFSA for all federal loans, such as Stafford, PLUS and Perkins loans. Some scholarships also require the FAFSA.
*Always exhaust your federal options first, such as Perkins, Stafford and PLUS loans, before looking at alternative sources of funding such as private loans or home equity loans. Federal student loan offer borrower incentives and protections that you will not find elsewhere.
March 13, 2009
Last month, the federal Dept. of Education released new guidelines about qualifying for Public Service student loan forgiveness program.
- The borrower must not be in default on the loans for which forgiveness is requested.
- The borrower must be employed full time by a public service organization –
- When making the required 120 monthly loan payments (certain repayment conditions apply – see below);
- At the time the borrower applies for loan forgiveness; and
- At the time the remaining balance on the borrower’s eligible loans is forgiven.
loan repayment requirements:
- The borrower must have made 120 separate monthly payments beginning after October 1, 2007 on the Direct Loan Program loans for which forgiveness is requested. Earlier payments do not count toward meeting this requirement. Each of the 120 monthly payments must be made for the full scheduled installment amount within 15 days of the due date
- The 120 required payments must be made under one or more of the following Direct Loan Program repayment plans–
- Income Based Repayment (IBR) Plan (not available to parent Direct PLUS Loan borrowers)
- Income Contingent Repayment Plan (not available to parent Direct PLUS Loan borrowers)
- Standard Repayment Plan with a 10-year repayment period
- Any other Direct Loan Program repayment plan, but only payments that are at least equal to the monthly payment amount that would have been required under the Standard Repayment Plan with a 10-year repayment period may be counted toward the required 120 payments.
The borrower must be employed full time (in any position) by a public service organization, or must be serving in a full-time AmeriCorps or Peace Corps position. For purposes of the Public Service Loan Forgiveness Program, the term “public service organization” means –
- A federal, state, local, or Tribal government organization, agency, or entity (includes most public schools, colleges anduniversities);
- A public child or family service agency;
- A non-profit organization under section 501(c)(3) of the Internal Revenue Code that is exempt from taxation under section 501(a) of the Internal Revenue Code (includes most not-for-profit private schools, colleges, and universities);
- A Tribal college or university; or
- A private organization that is not a for-profit business, a labor union, a partisan political organization, or an organization engaged in religious activities (unless the qualifying activities are unrelated to religious instruction, worship services, or any form of proselytizing) and that provides the following public services –
- Emergency management;
- Military service;
- Public safety;
- Law enforcement;
- Public interest law services;
- Early childhood education (including licensed or regulated health care, Head Start, and state-funded pre-kindergarten);
- Public service for individuals with disabilities and the elderly;
- Public health (including nurses, nurse practioners, nurses in a clinical setting, and full-time professionals engaged in health care practioner occupations and health care support occupations);
- Public education;
- Public library services; and
- School library or other school-based services.
January 15, 2009
It’s January, and that means you should get your FAFSA in NOW!
The easiest way is to do your taxes first, then copy the numbers over to the FAFSA as the FAFSA directly references the IRS 1040 form.
If you don’t have all your data yet, that’s OK – you can file based on what you have, such as your pay stubbs if your W-2s haven’t showed up yet, then file an amendment later.
I highly suggest you read the FAFSA Guide eBook, offered free from the Student Loan Network. It goes over the FAFSA line by line and explains it in terms we can all understand. It also has great tips on how to make sure you’re getting the most aid you qualify for.