The PLUS Loan for Parents is a federal education loan program many families utilize to pay for tuition, room and board not covered by financial aid or other loans, such as Direct Student Loans, provided to the student. In the PLUS Loan for Parents program, the borrower is a parent. A parent can borrow up to a student’s Cost of Attendance minus other financial aid including other student loans. However, credit is a factor in determining eligibility for PLUS. As such, not everyone will be approved. While the credit criteria used to determine approval for PLUS are not as stringent as they are for other consumer loans, a parent borrower still needs to meet a few credit-based conditions in order to receive financing. If those conditions aren’t met, a PLUS loan denial will be the result. Don’t give up hope, there are still a few options left open. We’ll go over each, but let’s start by looking at why you may be denied PLUS loan in the first place.
Recently, I was reviewing Sallie Mae’s How America Saves for College 2014 and was surprised by some of the findings. It’s no secret that college is getting more expensive, so I anticipated that more parents would be saving money to help their children meet those rising costs. Surprisingly, fewer people are saving for college compared to just four years ago. In fact, only 51 percent of parents with children under the age of 18 have some form of college savings plan in place. And here’s another shocker. Those who do have a savings plan will probably fall very short of their anticipated goals, putting away less than $20,000 total for college on average. That barely makes a dent now, so it will cover even less for those attending college in the future.
Last night, my daughter ran into my room brimming with excitement about a theatre school in New York City that she absolutely must attend next year. Being the proud ‘drama mama’ that I am, I didn’t simply shoot her down. Instead, we paid a visit to the school’s website. Everything looked amazing, but there didn’t seem to be any mention of tuition or fees. Intrigued, I searched for the ever-elusive Net Price Calculator that schools are expected to post on their websites. Surely this would tell me what my daughter’s dream school was going to cost me, right? I punched in our income figures, answered a few general questions, and up popped a number that made me suddenly sick to my stomach. Even after scoring a potential $4,000 scholarship, and taking out the maximum in student loans ($5,500), our responsibility would be a whopping $35,000 per year. Ouch! The number, however, didn’t seem to deter my daughter. She simply turned to me and said, ‘You can co-sign on a private student loan with me, right?’ Technically, the answer is yes. My husband and I both have good credit, but should we help finance this expensive dream? Before co-signing on any student loan, whether for your child or a friend, here are some things you should consider.
It’s no secret that many college graduates are finding it difficult to make ends meet. In today’s job market, they face longer periods of unemployment and many have been forced to accept lower paying job for which they are over-qualified. This, coupled with the increasing cost of a college education, has left many students scrambling for innovative ways to cover their student loan payments. Some have taken advantage of the federal student loan repayment plans that allow them to lower their payments by extending the repayment terms, and others have applied for forbearance, giving them a temporary break from making any payments at all. Although these options may provide some relief, they do not actually reduce their overall debt. In fact, they actually increase the amount students will owe over time. Two organizations have taken note of the current economic climate for college graduates and have come up with similar creative solutions to not only help students make their student loan payments, but also help them reduce their overall debt in a shorter period of time. The concept? Give back by volunteering in the community to get back financial rewards.
In a few short weeks, many college students will be taking their last exams and preparing for graduation. It’s a time of celebration and trepidation, as many make the transition from attending classes to actively seeking employment. The responsibilities of being a full-fledged adult are just now coming into focus, as they prepare to leave campus and head out into the real world. Many big decisions lay ahead, including one that may not be at the top of their priority list – repaying their student loans. I know it may seem like there’s plenty of time before that first bill comes due, but it will be here before they know it. Now is the perfect time to for students to review their repayment options and determine which will be the best fit. Here is a brief overview of all seven federal student loan repayment plans.