Your Parent PLUS Loan Was Denied. What Now?

Rejection in real life can trigger a painful emotional event that is hard to overcome. Our brain has a hard time processing the shocking information. It almost feels like a real, tangible threat, stalking us daily. Emotional pain is not a pleasant experience, especially regarding finances.

A Parent PLUS Loan denial can be a significant setback for some students. These loans are often necessary when a student’s financial aid package does not cover the full cost of attendance. To be eligible for a Parent PLUS Loan, a student must complete a FAFSA, And the parent borrower must have a solid credit history. Adverse credit history, such as bankruptcy or significant delinquencies, or a default on federal student loan obligations can hinder a parent’s ability to receive funding for their child. When a parent receives a denial notice, it can feel like the end of the world for the student.

Despite the initial shock of a Parent PLUS Loan denial, there are ways to navigate this unfortunate circumstance. One empowering option is to have the other parent apply for the Parent PLUS Loan. For instance, if the mother received denial notice but the father has a solid credit history with no federal student loans, it may be possible for them to receive a PLUS Loan in their name.

Another option is for a close relative or a family friend to become an endorser for a PLUS Loan. Like a co-signer on a loan, the endorser takes the risk of assuming payments if the parent fails to fulfill their obligation. In addition, endorsers and the parent must complete additional counseling before receiving a PLUS Loan. Endorsing a Parent PLUS Loan is an enormous risk that requires all parties to understand their obligations.

If a Parent PLUS Loan is entirely out of the picture, there are a few other possibilities to consider. Students can receive an additional unsubsidized loan to offset their educational costs. Although this increased unsubsidized loan amount may not cover all the expenses as a Parent PLUS Loan would, it’s still a viable tool to use when funding is tight. The best thing about this option? Unsubsidized loans won’t count in the student’s aggregate loan limit, which is especially helpful when entering graduate school.

It’s crucial to seek guidance from a financial aid counselor to determine your additional unsubsidized loan amount. Generally, most students can receive approximately $4,000 in additional unsubsidized loan proceeds. However, this amount can differ, so discussing your loan amounts with an experienced financial aid administrator is essential.

Consider a private student loan if you still need funding to augment your financial aid package after a Parent PLUS Loan. Private student loans may be more willing to work with a borrower with an adverse credit history than the federal government’s Parent PLUS Loan. There is also the possibility that a student with a decent credit history can sign for a private student loan without a co-signer.

Suppose obtaining additional financial aid resources is too burdensome, or you have a manageable, minimal balance. In that case, your next best option may be a payment plan with the institution’s Business Office. Goldey-Beacom College offers interest-free payment plans that split your total balance owed into payments over an extended period. The Business Office offers two payment plan types: four monthly payments for the semester in question or an annual payment plan that creates eight monthly payments between the fall and spring semesters. A few other payment plan options are available, so don’t hesitate to chat with the Business Office.

While a Parent PLUS Loan denial may initially feel like the end of the world, it’s important to remember that it’s not. Understanding that you have many options can provide a sense of relief and reassurance, helping you overcome this short-term bump and continue your academic studies.