FAFSA Form & Financial Aid Form Blog

This is for all the parents out there who help their college bound teenager with the paperwork necessary to receive grants and loans from the gov’t. Once you submitted the FAFSA form…the gov’t processes it and then they send a SAR (student aid report) to the school(s) listed on the FAFSA form. Once the school receives this, they create a financial aid award letter for your child. Typically, you get this is the mail, and it’s at that point in time you start wondering where this money is going to come from. The Stafford loan will cover some of the tuition, but not usually all of it. From a lot of the parents I talk to, they are short an average of 7k-14k a year…after all Federal aid is utilized (Stafford loan, pell grant, scholarships). The question I get is…should I borrow a Parent plus loan, or should I co-sign an alternative loan for my child?
Well that depends on several things:

1. If you want loans that are all deferred until after graduation, then the parent plus is not for you…those payments begin when the loan is disbursed to the school

2. If you want the child to bear some responsibility for these loans in the future, the parent plus loan is not for you….this loan will ALWAYS remain under the parent’s name until it is paid in full. However, most parents borrow these loans, and then require their child to make the payments once they are out of school.

3. If you want to help the child get through school, but you want them to be on their own when they finish, then an alternative loan might work best. You will be the cosigner, but most alternative loans have co-signer release programs after a certain number of on time payments are made.

***something important to remember: federal loans are forgiven/cancelled if the borrower of the loan becomes deceased…for parent plus loans, this holds true for the parent and for the child it was borrowed for. The same cannot be said for alternative loans. It’s hard to think about, but it’s an important factor in making your decision about what type of loan to borrow.

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