Part Two: If parents are denied a Parent PLUS loan, what are their options?
Last week, we outlined the basics from the Federal Parent PLUS loan, a great option for many families, but a choice that might not be available to all. When you have been denied a PLUS loan, you first have the right to appeal your decision by documenting extenuating circumstances ( Tweet this Tip ). For more information, see https://studentloans.gov/myDirectLoan/whatYouNeed.action?page=credit .
The student’s other parent or stepparent also can apply for the Parent PLUS Loan which will trigger another credit score checking for the new borrower to determine their eligibility. Finally, the original borrower also offers the option to utilize an endorser in order to cosign the loan. The endorser must pass the credit check, and or she will be responsible for repaying the particular loan if the borrower fails to create payments. For more information, see https://studentloans.gov/myDirectLoan/whatYouNeed.action?page=endorser . Currently, a cosigner release is not available on federal financial loans, and the student cannot serve as the particular cosigner on a Parent PLUS mortgage.
If a parent is certainly ultimately unable to secure a PLUS mortgage, the student becomes eligible for an increased amount of Unsubsidized Federal Direct Student Loan. The additional monies the student may borrow are likely less than the amount that was originally requested, but can assist with meeting education costs. Freshmen and sophomores are eligible for an increase of up to $4, 000, and juniors and seniors can get an increase of up to $5, 000. Note: this increase is not available to families who are approved in order to borrow the PLUS Loan or who re-apply and are approved by having an endorser.
While a PLUS loan denial can be disappointing, it doesn’t have to derail a family’s college plans . A parent who knows his choices can successfully overcome a PLUS refusal and institute a modified, yet no less effective, college payment strategy to bring that coveted degree attainable.