If you're looking for choices to help your student pay for college, no doubt you've looked at a Parent PLUS loan. They are generally easier to get approval for than private student loans, plus they usually have some additional repayment flexibility.
However, not all applicants are approved for any Parent PLUS loan. Fortunately, being denied isn't end from the story. There are steps you can take to be reconsidered.
Here's what you need to know if your parent PLUS loan is denied…
Consider Adding an Endorser to Your Application
If you had been denied for a Parent PLUS loan, you probably have adverse activity on your credit report. A Parent PLUS loan endorser is somebody that is creditworthy and may improve your application.
Your student can't be the endorser, but a buddy or member of the family can be. The option to list an endorser is available at the end of the loan application process. This cosigner will need to complete and electronic form called the Electronic Endorser Addendum.
Once you secure a cosigner, you will also need to go through the PLUS loan counseling on the Studentloans.gov website.
Let the federal government Learn about Extenuating Circumstances
If you do not have somebody that can cosign for you personally, you may still have the government reconsider the application should there be outside circumstances that affect the decision.
The primary parent plus loan denial reasons are related to adverse credit history. You can test to describe the adverse credit history in a manner that will help you to entitled to the loan instead.
Here are a few examples of extenuating circumstances that qualify for reconsideration:
- The adverse action is related to debt from the Chapter 13 bankruptcy bankruptcy (as opposed to Chapter 7, 11, or 12)
- You've consolidated a defaulted federal student loan and also the consolidation is current
- The detrimental events happened more than 5 years ago
- You possess a divorce decree that absolves you against make payment on debt associated with the adverse action
- You've made satisfactory repayment arrangements for a tax lien and may show 6 months of on-time payments
- The adverse action may be the result of an error
If you can show that you will find mitigating circumstances, you may be able to get approval after an appeal.
How Much Would you Get if Denied a Parent PLUS Loan?
If there's any good new about being denied for any PLUS loan, it's that your student will have use of more funding for college.
The Federal Student Aid Office allows students with parents who've been denied an advantage loan to borrow over the normal maximum limits for federal student loans.
Instead of only accessing $5,500 – $7,500 each year, your child will have access to $9,500 – $12,500 per year, depending on what year they are in school. The lifetime borrowing limit will be $57,500 instead of $31,000.
Can you be denied a federal education loan? Once a loan is included in a financial aid package, the only way it may be denied is if your student is not enrolled a minimum of half-time in class. Therefore it is an effective way for your student to gain access to extra funding, even though you will not help with a PLUS Loan.
Look for Other Funding Options
Many parents discover that a Parent PLUS loan is not a good deal once you think about the fees and interest rates. You may be best exploring other types of funding, including home equity, private loans, or finding private grants or scholarships for your student.
You might be able to be eligible for a a state loan, even though you may need a cosigner for that too. You can also have your student look into private student education loans whether it is sensible financially.
Most of, you can save a lot of money by finding a generous school that can help both you and your student save money on tuition and much more. There are schools that are considered to be more generous to students in a number of situations.
Finding those schools can be a challenge. It requires hundreds of hours to locate all the details, and there's still no guarantee you won't miss something. Let us make it easier for you.
Our College Insights tool can give you all the information you'll need.
Save yourself time and untold headaches by focusing on schools which are great financial match for your situation.
It helps you to save your student thousands of dollars and make their life easier after graduation.
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