How to Transfer a Parent Plus Loan to a Student
Contents
As the parent of a college student, you may want to know how to transfer a Parent PLUS Loan to the student. This way, the student can be solely responsible for the debt.
Checkout this video:
Introduction
The Parent Plus Loan is a federal student loan that allows parents to help their children pay for college. Parent Plus Loans have high interest rates and strict repayment terms, but they can be a valuable tool for families who need help paying for college.
If you have a Parent Plus Loan, you may be able to transfer the loan to your child. This can be a good option if your child is struggling to make the payments on their own. transferring the loan can help your child get a lower interest rate and more flexible repayment terms.
Here’s what you need to know about how to transfer a Parent Plus Loan to a student.
What is a Parent Plus Loan?
A Parent PLUS Loan is a federal student loan that is available to the parents of dependent students. The loan has a fixed interest rate and can be used to cover the cost of attendance, less any other financial aid that the student may receive.
The Parent PLUS Loan is not based on financial need and there is no annual or aggregate loan limit. The maximum loan amount that can be borrowed is the cost of attendance, minus any other financial aid that the student receives.
TheParent PLUS Loan has a fixed interest rate that is set by the federal government each year. For loans first disbursed on or after July 1, 2019, the interest rate is 7.08%.
The repayment term for a Parent PLUS Loan is up to 10 years. However, borrowers can choose to make payments while their child is in school or during a grace period. Borrowers can also defer payments if they are experiencing financial hardship.
How to Apply for a Parent Plus Loan
If you’re a parent or grandparent of a dependent undergraduate student, you may be able to help them pay for college by taking out a Parent PLUS Loan. PLUS Loans can help cover education expenses not covered by other financial aid, such as scholarships or federal student loans.
Here’s how to apply for a Parent PLUS Loan:
1. Complete the Free Application for Federal Student Aid (FAFSA®) form. You and your child will need to do this first.
2. After completing the FAFSA form, the U.S. Department of Education will send you a Direct PLUS Loan Application, also known as a Master Promissory Note (MPN). The MPN is a legal document in which you promise to repay your loan(s).
3. Complete and sign the MPN and return it to the loan servicer indicated on the form. Be sure to keep copies for your records.
4. Once your loan is approved, the U.S. Department of Education will notify you and your child’s school about how much money you can borrow.
How to Transfer a Parent Plus Loan to a Student
Most students who apply for financial aid will qualify for some form of loan. One type of loan that is available to students is the Parent PLUS Loan. The Parent PLUS Loan is a federal loan that parents can take out to help their children pay for college.
If you have a Parent PLUS Loan and your child is now ready to take over the loan, you may be wondering how to transfer the Parent PLUS Loan to a student. The process for transferring a Parent PLUS Loan to a student is actually quite simple. Here are the steps that you will need to follow:
1. The first step is to contact the lender that holds your Parent PLUS Loan. You will need to inform the lender that you would like to transfer the loan to your child.
2. Once you have contacted the lender, you will need to fill out and submit a transfer request form. This form can typically be found on the lender’s website.
3. After the lender has received your transfer request form, they will reach out to your child and ask them to complete and submit a new loan application.
4. Once your child has submitted their new loan application, the lender will review the application and determine if they are eligible for the transferred Parent PLUS Loan. If approved, your child will then be responsible for making future payments on the loan.
Pros and Cons of a Parent Plus Loan
There are several Pros and Cons of a Parent Plus Loan. Some of the Pros are that the Parents’s credit score is not a factor in getting approved for the loan. The loan can also be used for expenses such as food and books, in addition to tuition. One of the cons of this type of loan is that it typically has a higher interest rate than other loans. Another con is that if the student defaults on the loan, the parents will be responsible for paying back the loan.
Conclusion
The process of transferring a Parent PLUS Loan to a student is relatively simple. First, the parent should contact the loan servicer to request a transfer. Once the servicer approves the transfer, the parent can then ask the student to sign over the loan. The student will then be responsible for making all future payments on the loan.
