‘Direct PLUS Loan made to a parent cannot be transferred to the child’

by Grace

Don’t make the mistake of thinking a Direct PLUS Loan can be transferred from the parent to the child.

As a parent borrower, can I transfer my loan to my child?

No, a Direct PLUS Loan made to a parent cannot be transferred to the child. You, the parent, are responsible for repaying the loan.

Parents may be lulled into taking on excessive student debt, believing that this obligation can later be easily transferred to their children.  A verbal promise by a student to take over his parent’s debt after he graduates is easy to make at the beginning of the college experience.  But that promise can become hard to keep later on, especially when job prospects don’t pan out or when a student struggles to get his degree.

Parent PLUS loans are ”both remarkably easy to get and nearly impossible to get out from under“.  With good credit, a parent can take out a PLUS Loan up to the total cost of attendance.  That can easily exceed $50,000 each year.

A side agreement can be made to shift the PLUS Loan payment obligation from parent to child, but the government still views the parent as ultimately responsible.

Unlike most other debt, federal student loans can rarely be discharged in bankruptcy.

When can my federal student loans be forgiven, canceled, or discharged?

You must repay your loans even if you don’t complete your education, can’t find a job related to your program of study, or are unhappy with the education you paid for with your loan. However, certain circumstances might lead to your loans being forgiven, canceled, or discharged.

Death or Total and Permanent Disability are two circumstances that allow for loan forgiveness.

Be careful.  It can be challenging to pay off college loans during your retirement years.

Related:  Qualifying for a parent Direct PLUS loan (Cost of College)

About these ads

One Comment to “‘Direct PLUS Loan made to a parent cannot be transferred to the child’”

  1. Reblogged this on The College Money Man Blog and commented:
    Keep in mind, once borrowed the debt is on the original borrower!

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow

Get every new post delivered to your Inbox.

Join 172 other followers

%d bloggers like this: