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The high cost of college can be overwhelming for students and their parents — especially if you’re unable to qualify for a Parent PLUS Loan to help cover your child’s college expenses.
But even if your application for a Parent PLUS Loan is denied, you and your child aren’t out of options for this particular type of loan (or other ways to pay for college). In fact, your child may even be eligible for additional unsubsidized federal student loans.
Here’s what you need to know if you’ve been denied a Parent PLUS Loan:
- Options after a Parent PLUS Loan is denied
- Parent PLUS Loan requirements
- Compare private parent student loans to fill the gaps
- Parent PLUS Loans vs. private parent loans and cosigned loans
Options after a Parent PLUS Loan is denied
If you were denied a Parent PLUS Loan because you have an adverse credit history, you can still qualify for a Parent PLUS Loan in two other ways:
- Get an endorser. An endorser is like a cosigner on a private loan. An endorser can’t have an adverse credit history and must also agree to repay the Parent PLUS Loan if you don’t. The endorser can’t be the student whose education you’re taking the loan for.
- Provide proof of extenuating circumstances. If you can prove to the U.S. Department of Education that the adverse credit history is either based on incorrect information or that there were extenuating circumstances relating to the adverse event, then you can potentially qualify for a Parent PLUS Loan.
In addition to these approval avenues, here are some other ways to get the funding you need for your child’s education:
- Improve your credit. Work toward making your delinquent accounts current before you apply for a loan for your child’s education.
- Have your student apply for a private loan with a cosigner. Your child may be able to qualify for a relatively low-cost private loan if they apply with a cosigner with a robust credit history.
- Have your student apply for additional unsubsidized federal loans. Students whose parents are denied for Parent PLUS Loans may be eligible for additional unsubsidized federal loans. In fact, students may be able to borrow more money than they normally would if their parent’s PLUS loan application is denied. However, with unsubsidized loans, the interest will accrue while the student is in school, unless they choose to make interest payments, so it’s prudent to only borrow what you need. You will need to contact the financial aid office at your child’s school for more information.
Check out: 5 Steps to Take If You Can’t Afford College
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Parent PLUS Loan requirements
With a Parent PLUS Loan, an eligible parent can borrow up to the cost of their child’s attendance, minus any other financial assistance the student receives. Eligibility requirements include:
- You must be the biological or adoptive parent (or in some cases the stepparent) of a dependent student enrolled at least half-time in an undergraduate program.
- You must meet the general eligibility requirements for federal student aid, which include being a U.S. citizen or eligible noncitizen and having financial need.
- You must not have an adverse credit history.
While the Department of Education doesn’t have a specific credit score requirement for Parent PLUS borrowers, you can’t qualify for a loan if you have an adverse credit history. Specifically, you’re considered to have an adverse credit history if any of the following issues are on your credit report:
- You’re delinquent by 90 days or more on an outstanding balance greater than $2,085 on one or more debts at the time of the credit check.
- Your outstanding debts with a balance greater than $2,085 were placed in collection or charged off in the two years before the credit check.
- In the five years before the credit check, you were subject to any of the following: default determination, discharge of debts in bankruptcy, foreclosure, repossession, tax lien, wage garnishment, write-off of a federal student aid debt
Compare private parent student loans to fill the gaps
If you need to take out private parent student loans to fill in the funding gaps for your child’s education, make sure you compare lenders to find the best option for your financial situation. Since each lender has its own eligibility requirements, loan amounts, interest rates, repayment terms, and fee schedule, the only way to know you’ve found the right loan is to compare as many as possible.
This kind of comparison is easy with Credible. The companies in the table below are Credible’s approved partner lenders. Whether you’re the borrower or cosigner, Credible makes it easy to compare rates from multiple private student loan providers without affecting your credit score.
|Lender||Fixed Rates From (APR)||Variable Rates From (APR)|
|4.50%9 - 15.49%9||6.37%9 - 16.70%9|
Lowest APRs reflect autopay, loyalty, and interest-only repayment discounts where available. Prequalified rates are not an offer of credit. | 10Ascent Disclosures | 1Citizens Bank Disclosures | 2,3College Ave Disclosures | 11Custom Choice Disclosures | 7EDvestinU Disclosures | 8INvestEd Disclosures | 9Sallie Mae Disclosures
Parent PLUS Loans vs. private parent loans and cosigned loans
You have a number of ways to fill in the funding gaps after your student has received their federal student aid package. With a Parent PLUS Loan or a private parent loan, you’ll be the borrower and are agreeing to repay the loan, while your child will be the borrower with a cosigned private student loan.
Understanding the potential fees, terms, rates, and conditions of each type of loan can help you and your student determine the best option for their educational funding. Here are some things you’ll need to keep in mind while comparing your options:
|Parent PLUS loans||Private parent loans||Cosigned loans|
|Fees||Origination fee of 4.228%||Varies by lender||Varies by lender|
(up to 25 or 30 years with other repayment plans or through consolidation)
|5 to 15 years|
(with Credible partner lenders)
|5 to 20 years
(with Credible partner lenders)
|Who's responsible for monthly payment?||Parent||Parent||Student (if student can’t make payments, cosigner is responsible)|
|Cosigner release offered?||No||Depends on the lender||Depends on the lender|