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Parent Student Loans

Edgar Said:

Student loans: Can a parent's default affect their child's financial aid?

We Answered:

No.

Floyd Said:

Can a parent pay off a childs student loans with EE bonds?

We Answered:

The parent can use the bonds for the child's education tax-exempt if the bonds were issued after 1989 and the child is listed as a dependent. There are some income limitations and you must report the child still as a dependent. The child's name can be listed on the bond as a beneficiary, but not as a co-owner. If it is listed as a co-owner, the child can redeem the bonds tax exempt for education.

In response to v b's answer, I was going out on a limb making an assumption that the student loans might have something to do with being a student, like tuition and books. If the child didn't have any qualified education expenses in 2007, you could not use the bonds tax exempt. The Publication mentioned is on the link below. Look at page 55-56. On page 57 is a wooksheet you can use for an example.

There is a lot more you can learn from reading the attached link.

Dolores Said:

Amt of student loans without parent?

We Answered:

AGGRESSIVELY pursue scholarships and grants! Many of these will not require that your daughter have a 4.0 or be able to stand on her head or any other weird skill - tell her not to be intimidated when it comes to applying. So many scholarships go unclaimed, so if you're willing to do the research, it can be a massive help and...less debt! Fill out a FAFSA asap, contact her school and ask them for scholarship literature. Good Luck!!

Dwight Said:

Federal Plus Parent or Private Student Loans?

We Answered:

Private student loans are evil. Any loan you co-sign for is your ultimate responsibility... so I would do the PLUS loan and save both of your credit ratings in/when he defaults.

Also be aware before you borrow ANY money do you realize you will be having to borrow (or co-sign) for this amount or more every year for the next FOUR years? Can you afford and are you willing to that?

If not, make him go to a cheaper school... he can attend a perfectly good state school or community college for what he can borrow (without a cosigner and without a credit check) in federal student loans only.

Gertrude Said:

Parent Student Loans?

We Answered:

I believe since it is an unsecured loan they cannot go after your belongings. It will appear on your (parent and student) credit as bad debt and eventually may turn into a judgment. Judgments are recorded against your name. If you do own a home and have a judgment, the title company will require it paid or subordinated at/before closing.

Bruce Said:

Are credit checks more lenient when applying for Parent Plus Loans vs. Private Student Loans?

We Answered:

Yes, and if he is denied, you will be able to borrow a couple thousand more in Stafford loans as a result.

Howard Said:

About Stafford Loans/Parent Plus Loans and being a full-time student?

We Answered:

I just started school and I am receiving Federal Stafford Loans, one is subsidized and one is unsubsidized. Both of these loans do not require you to begin paying them back until 6 months after you graduate. However, the unsubsidized loans start adding interest right away (so the payback amount will grow from the time you take out this loan). The subsidized loans do not start adding interest until 6 months after you graduate.

Most importantly, call the financial aid office at your school. They will be able to answer all of your questions, including this one.

Good luck in school!

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