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Old 05-13-2012, 05:58 PM
 
Location: S.W.PA
1,289 posts, read 1,423,376 times
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One of my kids is starting college in the fall and her expenses will be in large part funded by a Parent Plus Loan that I will obtain thru Sallie Mae. I will also want to downsize our house- hoping to sell next spring and buy something smaller. This has to be done in any case regardless of college expenses. How will the Parent Loan be viewed by the future mortgage company? As payments will be deferred for several years will those payments be counted against my debt ratio? Am I walking into a trap?
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Old 05-13-2012, 06:47 PM
 
Location: Space Coast
1,981 posts, read 2,579,264 times
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My regular student loans counted against my debt:income ratio even when I was still taking classes (they were deferred). I'm not sure about Parent Plus, but I imagine they would, since you are the one responsible for the debt.
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Old 05-13-2012, 11:36 PM
 
735 posts, read 1,821,862 times
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This probably is not a good option (or an otion), but mentioning just in case...PLUS Loans do not consider debt to income ratio, so if you got the mortgage before the PLUS Loan, the debt to income itself from the mortgage debt would not be a factor in the PLUS Loan credit decision.
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Old 05-13-2012, 11:44 PM
 
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Your parent plus loan for a mortgage will factor into your debt to income ratio even if deferred.
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Old 05-14-2012, 05:26 PM
 
11,032 posts, read 9,547,747 times
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Quote:
Originally Posted by stevo6 View Post
One of my kids is starting college in the fall and her expenses will be in large part funded by a Parent Plus Loan that I will obtain thru Sallie Mae. I will also want to downsize our house- hoping to sell next spring and buy something smaller. This has to be done in any case regardless of college expenses. How will the Parent Loan be viewed by the future mortgage company? As payments will be deferred for several years will those payments be counted against my debt ratio? Am I walking into a trap?
Same situation here.It will impact your credit as any non-secured loan would.

Un-secured loans are the most risky. So it's not a positive on your credid score, but you did need decent credit to obtain a PLUS loan.
They are commercial loans, and are regarded by creditors as such.

We are taking out PLUS loans also.
You do what you need to do, I guess.
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Old 06-12-2012, 10:30 PM
 
318 posts, read 407,926 times
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I know you didn't ask, but let me share some unsolicited advice as a parent of a college student. My question is why are you taking out loans for your child's education?

When my daughter began college, we didn't have enough money to pay all her expenses and didn't qualify for grants. We looked at student loans, too, for her and me to pay for her education and associated expenses. After reading several experts advise parents not to incur student loan debt, I decided to let my daughter take out the student loans in her name and will help her pay them down when they become due.

Since most parents of college students need to hasten their retirement funding, experts advise against us borrowing money for their education. Plus, a parent loan shows on your credit report and can create problems for some. Also, many students I've discussed this with are proud of themselves for paying their own way. It has matured them quickly and keeps them focused on graduating asap.

So while my daughter's in college, I'm increasing my retirement accounts. She's working, too, to help pay some of her expenses and borrow less.
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Old 06-13-2012, 08:09 AM
 
27,708 posts, read 21,724,248 times
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Quote:
Originally Posted by FW transplant View Post
I know you didn't ask, but let me share some unsolicited advice as a parent of a college student. My question is why are you taking out loans for your child's education?

When my daughter began college, we didn't have enough money to pay all her expenses and didn't qualify for grants. We looked at student loans, too, for her and me to pay for her education and associated expenses. After reading several experts advise parents not to incur student loan debt, I decided to let my daughter take out the student loans in her name and will help her pay them down when they become due.

Since most parents of college students need to hasten their retirement funding, experts advise against us borrowing money for their education. Plus, a parent loan shows on your credit report and can create problems for some. Also, many students I've discussed this with are proud of themselves for paying their own way. It has matured them quickly and keeps them focused on graduating asap.

So while my daughter's in college, I'm increasing my retirement accounts. She's working, too, to help pay some of her expenses and borrow less.

But you still have to co-sign for the student. No one is going to hand out tens of thousands of dollars in loans to a kid in college without a cosigner.

My daughter did not qualify for any grants, either, only the normal federal student loans. Saving for college was not an option when she was growing up, since I lived paycheck to paycheck to support her. However, in the past few years my income has increased, and in his forties my ex decided to grow up a little and become a gainfully employed human, so by the time she went to school we were not eligible for any assistance.

However, I took out a Parents Plus loan the first year, before I got smart. The interest rate on the Plus loans is 8.5 percent! The next year, I had my daughter apply for a loan through our credit union at 5.89 percent. I had to co-sign for it, and I will pay it off for her. Her father has done the same for his share.
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Old 06-13-2012, 12:57 PM
 
11,032 posts, read 9,547,747 times
Reputation: 16223
Quote:
Originally Posted by FW transplant View Post
I know you didn't ask, but let me share some unsolicited advice as a parent of a college student. My question is why are you taking out loans for your child's education?

When my daughter began college, we didn't have enough money to pay all her expenses and didn't qualify for grants. We looked at student loans, too, for her and me to pay for her education and associated expenses. After reading several experts advise parents not to incur student loan debt, I decided to let my daughter take out the student loans in her name and will help her pay them down when they become due.

Since most parents of college students need to hasten their retirement funding, experts advise against us borrowing money for their education. Plus, a parent loan shows on your credit report and can create problems for some. Also, many students I've discussed this with are proud of themselves for paying their own way. It has matured them quickly and keeps them focused on graduating asap.

So while my daughter's in college, I'm increasing my retirement accounts. She's working, too, to help pay some of her expenses and borrow less.

Simple answer - we WANT to pay for our children's education.

When think of it as our responsibility.

This is not arguable. There are different schools of thought here.
I also don't care if my children graduate "asap".

And yes, they have summer jobs that are related to their future fields of endeavor, which do not involve fast food.
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Old 06-13-2012, 01:24 PM
 
Location: Heart of Dixie
1,298 posts, read 1,071,289 times
Reputation: 1540
It's noble to want to pay for childrens education. And I do assist. I wash clothes, feed THEIR dog, buy gas when needed...and I purchased each of their vechicles....In return they fund their own college days.

It's their education, they need to learn early what investments mean.
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Old 06-13-2012, 03:46 PM
 
11,032 posts, read 9,547,747 times
Reputation: 16223
Education is not an "investment." One can lose an investment. Knowlege is something that lasts forever and is not connected with money in an essentialist way.
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