Does my debt-to-income ratio, credit score, or employment status count against me when I apply for a PLUS loan? These factors aren't taken into account when credit history is reviewed. A lack of credit is not considered adverse credit. write-off of federal student aid debt.
Credit requirements for a Parent PLUS Loan
For five years before your credit is pulled: You can't have a loan default, a discharge of debts in bankruptcy, foreclosure, repossession, tax lien, wage garnishment, or a write-off of a federal student aid debt.
Yes. Parent PLUS loans are solely the legal responsibility of the parent, so of course they are based on their income. If you double consolidate you would make the loan eligible for less expensive repayment plans than ICR.
How to Use the Double Consolidation Loophole: The key to using the double consolidation loophole is to consolidate each of your Parent PLUS Loans twice. In this scenario, a borrower can have as few as two 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.
Parent PLUS loans are costlier and offer less flexibility than federals loans made directly to students. Here are the details: The interest rate and origination fee are both higher than student loans. If you want to defer payments until after your student graduates, you must contact the servicer.
Discretionary income is the amount of income a household or individual has to invest, save, or spend after taxes and necessities, are paid. (Necessities include mortgages, rent payments, utilities, student loans, and credit card debt.)
Yes, Parent PLUS Loans do influence your debt-to-income ratio (DTI). When a parent borrows a Parent PLUS Loan to fund their child's education, this new debt is factored into their DTI.
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.
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.
Unlike all other federal student loans, there are no explicit borrowing limits for parent PLUS loans. Parents may borrow up to the full cost of attendance, which is determined by the institution, not the government, and includes books, travel and living expenses. There are no ability-to-repay standards for PLUS loans.
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.
How long does processing take? Due to the value of PLUS applications at peak times (particularly summer and the start of the Fall term), PLUS loans can take 4 weeks for processing and for the loan to be posted on the student's financial aid summary.
The Parent PLUS loan application is based on the borrower's credit history; no loan officer will look at your income or other debt or otherwise evaluate whether you can afford to make the payments. It is your responsibility to make sure you aren't borrowing more than you can afford to pay back.
Disposable income is a net amount. It is the amount of money an individual or family has left to spend or save after all taxes are deducted from gross income.
income that is received in different amounts at different times; examples include birthday money, tips, bonuses, and interest on savings.
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.
Based on the information from Federal Student Aid, as of 2022, the average Parent PLUS Loan debt is $29,528. Although that might not sound like a huge amount, it depends on the parent's income.
Parent PLUS Loans aren't eligible for income-driven plans, including the income-contingent repayment plan. But don't worry. There's still a way to make loan repayment more manageable. By consolidating parent loans into a Direct Consolidation Loan, you'll be able to repay the new loan under the ICR plan.
Completing the Online Application: (Note: The online PLUS application for 2024-2025 should not be submitted before June 1, 2024.) You may apply for a Direct PLUS Loan at www.studentaid.gov.
Parent PLUS Loan Repayment Terms
Only the parent borrower is required to pay back a Parent PLUS Loan, as only the parent signed the master promissory note for the Parent PLUS Loan. The student is not responsible for repaying a Parent PLUS Loan. They're under no legal obligation to do so.
Generally, your child is considered dependent if he or she is under 24 years of age, has no dependents, and is not married, a veteran, a graduate or professional degree student, or a ward of the court. Learn about dependency status at StudentAid.gov/dependency.