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Parent Student Loan

Ricardo Said:

What's the difference between a student loan and a loan taken out by the parent?

We Answered:

The difference would be who is responsible for paying it. If a student was to get a loan they may get a higher rate since they don't have any established credit. But it would be a great way to start to establish their credit. Also the student may have the option to defer payments till after college. If the parents took out a second mortgage they wouldn't have that option.

Darrell Said:

Can I get a student loan if my parent earns too much?

We Answered:

Yes, anyone can get a student loan regardless of parental income. The starting process of taking out a Stafford loan is by filling out a fafsa application at http://fafsa.ed.gov You do not need a job, or cosigner and you do not need to pass a credit check to get a federal loan.

Jimmy Said:

what type student loan for parent as cosigner 4 student to be pd interest only principal at end of 4 yrs?

We Answered:

It's great that you want to help build your daughter's credit. Unfortunately, a PLUS loan can't help you meet this end: The parent -- not the student -- is the primary borrower of a PLUS loan and the only person whose credit is affected by it (approval is based on your credit and the debt will appear on your credit report, not hers).

Moreover, there are no Federal student loans on which the parent can co-sign while the student acts as primary borrower (Stafford and Perkins loans don't require a credit check, so while these are in her name and therefore can eventually add to her credit history, they don't help at the moment).

In theory, any private educational loan would help build your daughter's credit... Most of them would be in her name and would allow you to co-sign. However, most generic private educational loans tend to be at much higher interest rates, so I hesitate to recommend them. Anytime a parent (who needs a loan) CAN borrow a PLUS, they should go that route first... Federal aid is always your best option...

That said, there are a handful of student loan companies out there that offer attractive rates on private educational loans, provided that the co-signer has good-to-excellent credit. Check out MEFA's undergraduate loan as an example -- the credit criteria is tough, but the rates are great, relatively speaking. (MEFA is a Massachusetts not-for-profit that also deals in private loans, which it makes available to all states' residents.)

One route you might want to pursue, if you are considering co-signing a private student loan, is to check out companies specific to your state. Just like some states offer lower tuition to their residents, some companies offer special loans to their residents. Vermont and Alaska come to mind as examples of states that offers low-interest student loans to its residents (www.vsac.org). The rates on these loans might come close to the PLUS interest rate (8.5% fixed starting in July).

A non-loan option to consider: add your daughter's name to a credit card that you consistently pay in a timely manner. You don't even have to GIVE her the card if you don't want to -- simply having her name on the account will attach the card (and all its payment history) to her credit report. My parents did this for me many (many!) years ago (before I had even finished high school), and, as a result, I had a lengthy credit history well before I needed to obtain new credit on my own.

Reginald Said:

I applied for a Parent PLUS loan(not going to get it) so my question is about the subsidized student loan?

We Answered:

The disbursement for the subsidized stafford loan will not arrive before the semester begins. Usually there is a rule that checks cannot be disbursed until 30 days after the semester begins per federal regulations. Also your books and tuition will be subtracted from the loan amount, if they have not been paid off yet. You will receive the remainder. You can ask the school to let you know when the loan check arrives, instead of mailing it out. If your classes are starting in January, it will be at least 4 weeks into January and maybe even February before you will see any funds. In the meantime, go to the financial aid office and ask if your file is complete and ready to be processed. This can hold up loan proceeds.

Also, you didn't say why your parents didn't qualify for the PLUS loan. If it was due to bad credit, you maybe eligible for additional unsubsidized stafford loan in your name. You would need to present 2 acknowledgements from 2 different lenders stating that your parents were refused the PLUS loan. Present these to the financial aid office and tell them you want additional funds in your name. In the meantime, maybe you can get a loan from someone until the loan proceeds come in. Also, make sure you do not drop classes during the term or it may jeopardize your eligibility. Hope this answers your question, Good luck.

Darlene Said:

my daughters in college and i got a parent student loan who is responsable for paying it back?

We Answered:

colleges.mywebcommunity.org - it provides some tips about applying to US federal and state grants for college students.

Nicholas Said:

Direct plus parent student loan option?

We Answered:

Just contact the schools fin aid office and tell them you and your parents have changed their minds and your parents want to do the PLUS loan now. Also be sure your parents are willing to borrow this money (and more importantly repay it). PLUS loans they start making payments on immediately after you start school... if you are attending a school that is expensive enough you need this money, be sure they are willing to borrow this every year while you are a student there. You'd hate to be there a year and them decide they can't afford to take another plus loan when you are a sophomore, or they couldn't afford for you to take a third loan while you are a junior, and especially if you had to drop out because they couldn't afford to take a 4th loan (four loans four separate payments) when you are a senior.

Have you hugged your parents lately? YOU SHOULD!!!

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