If you're a parent or graduate student seeking a Direct PLUS Loan, one of the requirements to qualify is that you must not have an adverse credit history. If your application is denied because of an adverse credit history, don't give up. You still have options.
Parent plus loans are not approved based on the amount they are borrowing, just on whether they meet the requirements of not having a bankruptcy in the last 5 years, being current (90 days) on debts, and not being in default on any government obligations (prior defaulted student loans, FHA loans, etc).
More than $2,085 in total debt in collections or charged off in the past two years (before the date of the credit report); or. Default, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off of federal student loan debt in the past five years (before the date of the credit report)
No minimum credit score is needed to get a parent PLUS loan. Federal loans aren't like private parent student loans, which use your credit score to determine whether you qualify and what interest rate you'll receive. But parent PLUS loans do have a credit check, and you won't qualify if you have adverse credit history.
How long does it take to process a Federal Direct Parent PLUS Loan? Depending on the time of year, processing can take 2-4 weeks.
Yes, you can get student loans with bad credit. Federal student loans don't have a minimum credit score and most don't require a credit check at all. Some private student loans are available with bad credit but can be costly without a creditworthy cosigner.
Graduate PLUS Loans have much more forgiving credit criteria than most (if not all) private alternative loans. They simply require the 'absence of negative credit history' and do not require any sort of income level or debt-to-income ratios like all other loans require.
Parent PLUS loans can potentially be forgiven after 10 years under specific conditions, such as through the Public Service Loan Forgiveness (PSLF) program after consolidation into a direct consolidation loan. Parent borrowers must enroll in the Income-Contingent Repayment (ICR) plan to qualify for PSLF.
PLUS loans are not based on a family's income or assets and parents can borrow up to the total cost of education, minus any financial aid the student will receive.
You've defaulted on an existing federal student loan. You owe a refund on any previous federal grants. You're enrolled in an academic program that makes you ineligible for funding. Your eligible noncitizen status was revoked or expired.
Eligible parents of eligible dependent undergraduate students should apply for a parent PLUS loan with a Direct PLUS Loan Application. Parents and students can't share the same account username and password (FSA ID).
Pros and cons for parent PLUS loans
PLUS loans don't require good credit, making them an ideal option for low-credit borrowers. However, you can't have an adverse credit history, such as bankruptcies or loan defaults within the past five years.
What Are Some Reasons to Avoid PLUS Loans? First, PLUS loans have no automatic grace period. Then there's the fact they aren't eligible for most IDR plans. Then, borrowing too much is easy to do, and finally, they're nearly impossible to get out of, even in bankruptcy.
Requirements for parents:
You must be the biological or adoptive parent of a dependent undergraduate student enrolled at least half-time. You must be a U.S. citizen or eligible non-citizen. You generally must meet minimal credit standards, and the student must meet general eligibility requirements for financial aid.
For example, if your citizenship status changed because your visa expired or it was revoked, then you would be ineligible. Other reasons for financial aid disqualification include: Not maintaining satisfactory progress at your college or degree program. Not filling out the FAFSA each year you are enrolled in school.
Borrowers must complete the Direct Loan Program requirements listed on this page in order to receive loan funds. See the appropriate links for other details, including how to apply for a Direct PLUS Loan. Note that it takes two to four weeks to process loans through our office.
Grad PLUS Loan Minimum Credit Score. Unlike a traditional consumer loan through a private lender, the Department of Education doesn't set a minimum Grad PLUS Loan credit score to qualify. Instead, the program states that borrowers can't have an adverse credit history.
You, the parent borrower, are legally responsible for repaying the loan.
To be eligible for a Direct PLUS Loan for parents, you must be a biological or adoptive parent (or in some cases a stepparent), not have an adverse credit history, and meet the general eligibility requirements for federal student aid (which the child must meet as well).
If you don't meet baseline eligibility requirements, or if you've previously defaulted on a loan, you may not be approved for a federal student loan. You must maintain "satisfactory progress" in school to be approved for student loans. You can take steps to regain or improve your eligibility for student loans.