PLUS Student Loan Cancellation
An account was opened for my son [edit] we misunderstood what the college advised and thought that the Parent Plus loan was for my son to borrow extra student loan money. But the account ended up in my name [edit] and this loan was for my son [edit]. How can we get this loan transferred into his name and out of my name. This loan was not
used by me in any way. Only a student loan used by my son [edit]. I would appreciate any help you can give me in this matter.
- Randy, September 4, 2007 (name changed for privacy)
Hi Randy, were you trying to reach us, Chase Student Loans, or some other student loan company? Please remember to keep your account numbers private, and only provide them to those who need them. Email is not considered a safe way to transfer this information, though we all do it in a pinch.
Student loan paper work are financial contracts just like a car loan or home loan. The PLUS loan application you signed should tell you your rights and responsibilities on it, and who to contact for questions. Your college is most likely not the finance company behind the loan. You might start by calling them, and ask what other options you have to finance your son’s education.
Federally sponsored loans such as Stafford, PLUS and others have caps and standardized features. Visit the school and pick up any pamphlet to learn more about the features, limits, and obligations. If it is absolutely necessary for you to take the loan out of your name, you will need to pay it off, if you are past any “out” clause for example. Again call the bank responsible for servicing your PLUS loan.
Other student loan products are available. If your son has already taken the maximum from the federal programs, he can try to get a private student loan such as the one from Chase found on our website. If he has good credit, he can get the loan without a co-signer.
Either way you should compare your options, paper by paper, loan application by loan application to make sure your family is better off in the end.
- John
After thoughts:
PLUS loans are available under the student’s name for Graduate school. Ask your Financial Aid counselor for details about the Graduate PLUS student loan program.
The Federal PLUS Loan Application and Master Promissory Note that I have here on my desk is OMB No. 1845-0069 Exp. Date 03/31/2008. Cancellation is clearly labeled in the Borrower’s Rights and Responsibilities Statement, Section 11. Section 11 Loan Cancellation discusses both full and partial PLUS loan cancellation terms and conditions as set by the Act (which created the standardized Federal loan programs). Here’s what it says, but remember that while the program is standardized, what YOUR promissory note says is what’s important, not what mine says:
11. Loan Cancellation – I understand that the terms or a full or partial loan cancellation depend on when I request the cancellation.
• At any time before my loan money is disbursed, I may decline all or part of my loan money by notifying my lender or my dependent’s school. No origination fee, guarantee fee, or interest will be charged on the amount of a loan that is declined.
• If the school receives the money by EFT and credits it to my dependent’s account, I may cancel all or a part of that loan by informing the school within 14 days after the date the school sends me a disbursement notice, or by the first day of the school’s payment period, whichever is later. (The school can tell me the first day of the payment period). If I cancel all or a portion of a loan as described in this paragraph, the school will return to my lender the cancelled amount of the loan money and the loan fees will be reduced or eliminated in proportion to the amount returned.
• At any time within 120 days of disbursement, I may pay back all or a part of that loan. The loan fees will be reduced or eliminated in proportion to the amount returned.
(end of Section 11)