Grad Plus and "closed by grantor"?

[mcroaiv]

Hello, everyone--

At the link below is the definition of "adverse credit history" WRT Grad Plus loans.
http://www.law.cornell.edu/cfr/text/34/685.200 (search "adverse")

And here we have a leaflet from ed.gov saying much the same thing:
http://www.ifap.ed.gov/dlbulletins/attachments/DLB0703Attach.pdf

Question 1.

I have a credit card that reports as "closed by grantor" to all three credit bureaus. I am now current with my payments, which go to the credit card company itself, so everything else in the entry reads fine, "pays as agreed," etc. Nothing says "charge off."

Is there any possible way that this card could show up as a default during the Grad Plus credit check?

Question 2.

I presume "90 days delinquent" means not CURRENTLY delinquent? Will formerly delinquent, now current accounts cause a problem?

Question 3.

If one must resort to a creditworthy endorser, must the endorser be employed? I do have a candidate in mind, but this person is receiving (a decent income from) Social Security and pension.

Question 4.

Any other thoughts on Grad Plus and credit you'd like to share?

Thank you for your time. I welcome all responses, but answers from people with first-hand knowledge would be most helpful. Thanks!

[hodap2001]

Welcome to the CreditBoards!

 

Hello, everyone--

At the link below is the definition of "adverse credit history" WRT Grad Plus loans.
http://www.law.cornell.edu/cfr/text/34/685.200 (search "adverse")

And here we have a leaflet from ed.gov saying much the same thing:
http://www.ifap.ed.gov/dlbulletins/attachments/DLB0703Attach.pdf

Question 1.

I have a credit card that reports as "closed by grantor" to all three credit bureaus. I am now current with my payments, which go to the credit card company itself, so everything else in the entry reads fine, "pays as agreed," etc. Nothing says "charge off." To be eligible for a Direct PLUS loan you must not have any adverse credit as you referenced on Cornell Law and IFAP (Information For Financial Aid Professionals); therefore, for credit cards they must not have any Write Off's or Charge-Off's. Why was the credit card "closed by grantor" was this account delinquent? Did you pay it off?

Is there any possible way that this card could show up as a default during the Grad Plus credit check? There is always a slim possibility it show up during the credit check and if it does, you are eligible to appeal the denial based upon factual documentation that you have since resolved the account satisfactorily by the creditor. I would also recommend that you have an endorser on stand-by in case the loan cannot be approved after the appeal has gone through.

Question 2.

I presume "90 days delinquent" means not CURRENTLY delinquent? Will formerly delinquent, now current accounts cause a problem? Adverse credit also means being delinquent on an account; therefore, this could also bring up a red-flag and you can appeal this if you are denied.

Question 3.

If one must resort to a creditworthy endorser, must the endorser be employed? I do have a candidate in mind, but this person is receiving (a decent income from) Social Security and pension. Among other credit checks; the endorser does not have to be actively employed; however, they must report their income on the Endorser Form (i.e. Social Security and Pension amount) and must be prepared to take over this plus loan should you fail to repay this obligation; in addition, the endorser credit will suffer should you fail to make payment. You need to fully disclose to them that this is a federal debt and it must be repaid and you both will be held liable for the account. Furthermore, if you default on this account they will go after the endorser and garnish their social security to repay this federal debt (you will be putting this individuals retirement life in jeopardy if you do not repay!) I am not going to sugar coat this - I am being straight honest with you so you fully know the ramifications of taking out a PLUS loan with an endorser.

Question 4.

Any other thoughts on Grad Plus and credit you'd like to share? Yes, do NOT borrower more than the cost of attendance! (Live on rice and beans, beans and rice!) Borrow responsibly and your repayment begins within 60 days of the final disbursement of the PLUS loan; therefore, your repayment will begin almost immediately.

Thank you for your time. I welcome all responses, but answers from people with first-hand knowledge would be most helpful. Thanks!

 

Good Luck to you and let me know if you have any questions or concerns!

Edited April 21, 2014 by hodap2001

[mcroaiv]

Thank you for your reply.

 

The card was closed by grantor because I became delinquent. I brought it current and am making payments as agreed. I am paying the original creditor, not a collection agency. I do not at present have the money to pay it off entirely. If I had to, perhaps as part of an appeal, I could pay it off. (I don't do this right away because I am presently using an asset I will eventually liquidate; I could liquidate sooner if I really needed to.)

 

I hesitate to call the card company and ask, "Was this charged off, or what?" because I do not want it to start reporting as charged off.

 

I really appreciate your thoughts. All the best.

[hodap2001]

I would just pay it off so you don't have the debt any-more and please don't use Student Loans to pay for other types of debt (i.e. Robbing Peter to Pay Paul type of situation).

 

Good Luck to you!