Gradplus Loans/Credit History

[becool5]

Hello,
I tried searching for information on this but I couldnt find anything. I've been told that the Grad plus loans are partially based on your credit history and certain things can prevent you from getting a loan. My credit score is not great, but I have been making improvements and plan on contuining with that. I have stayed current on my car loan (4 years) and my undergrad student loan (4 years). I dont have any major issues like a bankruptcy, etc. however I have had a few credit cards (circuit city, chase) go into default.

I am going to try to build up some savings and my wife will work. I am expecting to use the full amount of Stanford Loans, but I was hoping to get an additional $5-10,000 in Grad Plus. Any advice would be much appreciated. Also, if Grad Plus is not an option, is there anything else I can apply for other then private loans? Does that only depend on the school and what institutional aid they provide? Thanks.

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[AMDFAO]

It's pretty dismal to say the least: they don't consider your credit score (FICO) at all. What they will be looking for is late or missed payments over the last 5 years which it seems you have. The slickest way to answer the question is to apply for a Grad PLUS and see what happens. It does NOT become a legally binding loan until the school certifies it which most likely won't happen until you get to school. You have a certain period to cancel the loan as well. Best case: they approve and I'm sure you know worst case which isn't the end of the world.
If you are denied, you may ask to appeal the denial-- fight the good fight. The lender has the discretion to approve you depending on the circumstances. If you are still denied you have the option of adding a co-borrower (co-signer) on the PLUS to get it approved. Your co-borrower would be legally tied to the debt. It is possible to borrow a gradPLUS with a co-borrower and then when the loan is fully funded (spring) consolidate it. The gradPLUS essentially turns into an unsub which has no co-borrower. You don't get a better rate but you've now eliminated the risk of your co-borrower if anything happens to you. You can consolidate a gradPLUS while deferred in school unlike a sub or unsub. There currently is no grace on a PLUS but that may change... I can't say for certain that the consol of a PLUS to an unsub will remain in tact but I have not read anything to the contrary. Call your school and see what they suggest as well (and be sure to bond: ask me how I am; call in the morning since it's usually quiet since my students are not around, unlike lunch time where all hell breaks loose; try Tuesday and not Friday). I'm not sure what kind of suggestion they will make but:
As for the alternative (non fed backed) beware of what you are getting into on this. Your spouse should be in on the plan and understand her liabiltiy if she co-signs or not. Don't just go for it because it was the easier route now but consider the long term. Fed loans have a whole host of benefits that don't revolve around the interest rate: death and disability forgiveness, unlimited deferment if you meet the criteria, multiple repayment plans etc... Alternative loans write their own rules since it was their cash and if you don't pay it, they can't get it from the gov't. Typically alternative (private) lenders limit the amount of deferment and repayment since they want their money back withing a certain time frame and frankly don't give a care what's happening to you.

 

[futuredo32]

The Grad Plus credit requirements are pretty lenient. Try a search. There was a thread here within the last few months about it.

 

[becool5]

Thank you for the information. It sounds like maybe I should start with my parents as a co-signer? They said they would be willing to do that and understand the risk.

 

[futuredo32]

I found the site with requirements for a grad plus loan, I don't know if it varies from one lender to another.
https://www.accessgroup.org/AppSecure/Loan_Terms/LoanDetails.aspx?schoolid=005889%2300#M1&loant=PLG

To qualify, your credit report cannot reflect any of the following adverse items:Currently 90 days or more delinquent on repayment of any debt
Debt discharged in bankruptcy during the past 5 years
Evidence of a default, foreclosure, tax lien, repossession, wage garnishment, or write-off of a Title IV debt during the past 5 years

 

[becool5]

So maybe this is not as bad as I thought, if I am reading it right:

1. Currently 90 days or more late on any debt-So I assume this to mean that at the time of the application, you can't be more then 90 days late, but if you were 90 days late on a payment from years prior it wont count against you.

2. Bankruptcy-I don't have to worry about that.

3. Default on a title IV loan, it looks like that means any student loan-type debt. I currently and have always been current on my undergrad loan.

So hopefully base on this, I would get approved.

 

[prionsRbad]

So maybe this is not as bad as I thought, if I am reading it right:

1. Currently 90 days or more late on any debt-So I assume this to mean that at the time of the application, you can't be more then 90 days late, but if you were 90 days late on a payment from years prior it wont count against you.

2. Bankruptcy-I don't have to worry about that.

3. Default on a title IV loan, it looks like that means any student loan-type debt. I currently and have always been current on my undergrad loan.

So hopefully base on this, I would get approved.

I was approved for my Grad Plus loan last week and I had a 30-day late payment in 2005, a 60-day late payment in 2004 and a $24.00 check that went to collections in 2004 (from Papa Johns .... ordered pizza one night in college and bounced the check ). I was afraid that would make me ineligible, but everything turned out fine.