Loan Counseling
difference between Stafford and PLUS loan?
Students are the borrower for Stafford loand. PLUS loans are available for qualified dependent students with a parent as the borrower.
Thanks.. So what you are explaining is a parent can co-sign or borrow money (loan)as long as their child is considered an dependent; Is there an age limit?
Here is an exerpt from the federal website:
You must be the student's biological or adoptive parent or the student's stepparent, if the biological or adoptive parent has remarried at the time of application. Your child must be a dependent student who is enrolled at least half-time at a school that participates in the Direct Loan Program. For financial aid purposes, a student is considered "dependent" if he or she is under 24, unmarried, and has no legal dependents at the time the Free Application for Federal Student Aid is submitted. (Exceptions are made for veterans, wards of court, and other special circumstances.) If a student is considered dependent, then the income and the assets of the parent have to be reported on the FAFSA.
I have also attached the link:
http://www.direct.ed.gov/parent.html
Stafford loans are federally guaranteed loans based on financial need. Interest does not accrue on the loan while you are in school at least half time, or during any future deferment periods. The federal government "subsidizes" (or pays) the interest during these times. Additionally, there are maximum amounts you can receive per school year. These are taken out by the student.
Parents of dependent students can take out loans to supplement their children's aid packages. The federal Parent Loan for Undergraduate Students (PLUS) lets parents borrow money to cover any costs not already covered by the student's financial aid package, up to the full cost of attendance.
Patrice - thanks for the great summary of the different loan types.
Why aren't the parents require to have entrance loan counseling since they are bearing the burden of the cost of the program ?
I agree that parents could also use this counseling! A school can always go above and beyond the regulations in ways such as providing such counseling to parents as well as students. I think the regulation is based on the assumption that many students are new borrowers and this may be their first financial loan obligation whereas they assume parents have managed debt and are more educated on relevant responsibilities associated with their loan burden.
Parents could really benefit from loan counseling. The ability to manage debt responsibly should not be assumed because parents are generally "of age". The current state of the economy is just one example of this. When borrowing money for whatever the reason parents and students should enter into such a decision with their eyes wide open. They need to fully understand the benefits and drawbacks of borrowing money and the expectations when paying it back.
Well stated, Aziza! The need for this full understanding is part of the goal of recent regulations yet the parental counseling is still not required.
