PLUS Loan Application Denied - What Now?

As the parent of a college student, there is a good chance that you have filled out a PLUS loan application at some point. PLUS loans allow the parents of college students to borrow money to help pay for their college or cover other expenses. While this is a great program, sometimes, you are denied the ability to take out loan. If you have not been approved for the loan that you need, you may be wondering what to do next. Here are a few options that you could have if your PLUS loan application is denied. 

Home Equity Loan

If your PLUS loan application is denied, one of the best options that you may have is to take out a home equity loan. With a home equity loan, you can gain access to money at a reasonable interest rate to help you pay for college expenses. If your home equity is available, using it for this can be a very good option. You can get a low, fixed payment every month and just borrow money that you have already earned by paying your mortgage. With the home equity loan, you can even deduct the interest that you pay on your income taxes. This will give you a major advantage over other types of loans that you could get as it will basically save you most of the money that you have paid to the lender in payments. You can increase your income tax refund and help your child pay for college all at the same time. 

Personal Loan

Another option that you could pursue is to get a personal loan. Personal loans are usually not secured by any collateral and largely depend on your credit. The interest rates that you can get on these are usually not as low as that of a PLUS loan or a home equity loan, but it could be your next best option. 

One of the most common ways to get a personal loan is to apply at the bank. They do many personal loans every day and if you have worked with them in the past, they may be willing to accommodate you. Although personal loan terms will not be as good as a HELOC or student loan, it is a viable option. Be sure to budget your money properly so that you do not end up financially strapped.

Life Insurance Policy Loan

If you have a whole life insurance policy or some other policy with cash value, you could potentially borrow against it to pay for college expenses. This is a good option because the interest is very low and the loan does not depend on your credit. If your insurance policy allows for loans, you can borrow against them. You also will generally receive flexible repayment terms. If you choose not to make a payment, the interest will just be added onto the balance of the loan. This gives you a lot of options during the repayment period to work with.