Parent Plus for full amount or smaller and Smart Option for rest

[Anonymous]

Without going into great depth on my situation, I'm at 695 Ex, 8% CU, young file, three baddies from a few years ago ($1,500, $3,500 and $1,000, all in collections and being paid slowly but surely).

Need $26,000 for my son's last year at school (and to pay off money spent on summer classes).  If I apply for Parent Plus loan for full amount will they straight out deny me (unless they approve me! , or maybe say I'm approved for some amount less and give me the option for accepting?  Will applying for say, $10,000 instead greatly increase my chances for approval or only a little?  I'd then need to have my son apply himself for Smart Option and see if I can get him a co-signer.  Thoughts, advice, suggestions?  Thnaks!

[CreditInspired]

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@Anonymous wrote:

Without going into great depth on my situation, I'm at 695 Ex, 8% CU, young file, three baddies from a few years ago ($1,500, $3,500 and $1,000, all in collections and being paid slowly but surely).

Need $26,000 for my son's last year at school (and to pay off money spent on summer classes).  If I apply for Parent Plus loan for full amount will they straight out deny me (unless they approve me! , or maybe say I'm approved for some amount less and give me the option for accepting?  Will applying for say, $10,000 instead greatly increase my chances for approval or only a little?  I'd then need to have my son apply himself for Smart Option and see if I can get him a co-signer.  Thoughts, advice, suggestions?  Thnaks!

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I would think this loan is the same as any other loan as far as being approved or not approved. IMHO, I don't think you would be approved for a loan for $26K or even $10K because there are 3 collections on your CR, even if you are paying them down. And, we don't know your entire credit profile.

I just did a Google search because honestly, I hadn't heard of this loan and from my reading, it should be the last option a parent take when borrowing for their child's education. Here is that link:

https://studentloanhero.com/featured/federal-parent-plus-loan-times-mistake/

Sorry I couldn't provide a more positive outcome. Hopefully other more knowledgeable members with more experience with this type of loan will come by shortly. 

[Anonymous]

When is his last year at school? Will the be living with you or is he independent?
I ask because the deadline has passed for applying for the upcoming school year. You may still apply, but the options will be much more limited, at least for him. The first option imo really should be him getting his own federal student loan (if he hasn't maxed out). It probably would have covered summer school but that's neither here nor there now.
I'm a bit rusty in the FAFSA but the maximum amount anyone can borrow is the estimate cost minus the EFC (expected financial contribution). If you are borrowing the maximum, there's usually not much money leftover (unless you can find a great deal on housing, food, etc.). You just be truthful about living circumstances and other information they ask.
If he lives off-campus and he is older (20's?), independent, he can likely get the student loan. He won't get the grants, scholarships and probably not work study as a part of his package at this point. However, he would likely be eligible for both subsidized loans and Unsubsidized loans. This is important because those subsidized loans don't accrue interest while he is in school and the have other interest benefits in repayment. There is a limit to the maximum that can be borrowed per year. Additionally, when it comes to repaying the loan, your plans will be limited. To even get payments based on your income, you'll need to consolidate and you'll only be eligible for the highest plan. Students have a variety of flexible plans.

I do not believe you can choose the amount that you are given. You are either approved or not, based on your credit. (Because if they give you too much you can always repay it right away.) Students however are just eligible, their credit is not a factor.
If you decide to apply for parent aid through the FAFSA, and you don't get it, they then offer it to the student. These would be unsubsidized loans.

"You must not have an adverse credit history. A credit check will be conducted. If you have an adverse credit history, you may still be able to receive a PLUS loan if you meet additional requirements.
The maximum PLUS loan amount you can receive is the cost of attendance (determined by the school) minus any other financial aid received. ....
** Adverse credit history:
Accounts with a total outstanding balance greater than $2,085 that are 90 or more days delinquent as of the date of the credit report, or that have been placed in collection or charged off during the two years preceding the date of the credit report."


You can read more about the details and the limits here:

PLUS loan:
https://studentaid.ed.gov/sa/types/loans/plus

Subsidized and Unsubsidized student loans, including limits per year in school, independent vs independent student and student lending after a denied PLUS loan:
https://studentaid.ed.gov/sa/types/loans/subsidized-unsubsidized#how-much

Understanding repayment options:
https://studentaid.ed.gov/sa/repay-loans/understand/plans

If you have any more questions feel free to ask.

[CreditInspired]

Thanks @Anonymous for providing OP with a very detailed and informative response. It's wonderful to have someone with your expertise in the MyFICO community.

[Anonymous]

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@Anonymous wrote:
When is his last year at school? Will the be living with you or is he independent?
I ask because the deadline has passed for applying for the upcoming school year. You may still apply, but the options will be much more limited, at least for him. The first option imo really should be him getting his own federal student loan (if he hasn't maxed out). It probably would have covered summer school but that's neither here or there now.
I'm a bit rusty in the FAFSA but the maximum amount anyone can borrow is the estimate cost minus the EFC (expected financial contribution). If you are borrowing the maximum, there's usually not much money leftover (unless you can find a great deal on hiding, food, etc.). You just be truthful about living circumstances and other information they ask.
If he lives off-campus and he is older (20's?), independent he can likely get the student loan. He won't get the grants, scholarships and probably not work study as a part of his package at this point. However, he would likely be eligible for both subsidized loans and Unsubsidized loans. This is important because those subsidized loans don't accrue interest while he is in school and the have other interest benefits in repayment. There is a limit to the maximum that can be borrowed per year. Additionally, when it comes to repaying the loan, your plans will be limited. To even get payments based on your income, you'll need to consolidate and you'll only be eligible for the highest plan. Students have a variety of flexible plans.

I do not believe you can choose the amount that you are given. You are either approved it not, based on your credit. (Because if they give you too much you can always repay it right away.) Students however are just eligible, their credit is not a factor.
If you decide to apply for parent aid through the FAFSA, and you don't get it, they then offer it to the student. These would be unsubsidized loans.

"You must not have an adverse credit history. A credit check will be conducted. If you have an adverse credit history, you may still be able to receive a PLUS loan if you meet additional requirements.
The maximum PLUS loan amount you can receive is the cost of attendance (determined by the school) minus any other financial aid received. ....
** Adverse credit history:
Accounts with a total outstanding balance greater than $2,085 that are 90 or more days delinquent as of the date of the credit report, or that have been placed in collection or charged off during the two years preceding the date of the credit report."


You can read more about the details and the limits here:

PLUS loan:
https://studentaid.ed.gov/sa/types/loans/plus

Subsidized and Unsubsidized student loans, including limits per year in school, independent vs independent student and student lending after a denied PLUS loan:
https://studentaid.ed.gov/sa/types/loans/subsidized-unsubsidized#how-much

Understanding repayment options:
https://studentaid.ed.gov/sa/repay-loans/understand/plans

If you have any more questions feel free to ask.

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Thanks for the info and resources!