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Parents taking student loan money for personal use

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Arynella

Junior Member
What is the name of your state (only U.S. law)? Maryland/Pennsylvania

My sister in law is in her senior year of college. Her parents co-sign a Parent Plus loan every year to supposedly pay for her living expenses. However, they have the money sent to their personal accounts and then use it for their own personal expenses. She's left hanging every semester. This year, she'll be working three jobs just be able to eat and is making herself sick over whether or not her rent will get paid. Does she have any sort of legal recourse for getting her parents to use her loans for her living expenses?

This is infuriating for me to watch and I just feel like there should be something she can do.
 


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sandyclaus

Senior Member
Arynella said:
What is the name of your state (only U.S. law)? Maryland/Pennsylvania

My sister in law is in her senior year of college. Her parents co-sign a Parent Plus loan every year to supposedly pay for her living expenses. However, they have the money sent to their personal accounts and then use it for their own personal expenses. She's left hanging every semester. This year, she'll be working three jobs just be able to eat and is making herself sick over whether or not her rent will get paid. Does she have any sort of legal recourse for getting her parents to use her loans for her living expenses?

This is infuriating for me to watch and I just feel like there should be something she can do.
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A Parent Plus loan is taken out by PARENTS, not the student, so they aren't co-signing anything. It is intended to be used to pay for tuition and any eligible school expenses, minus any other aid the child receives. It isn't intended to cover rent or other living expenses.

I think your SIL is either not understanding the situation or she is misstating it to you.
 
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ecmst12

Senior Member
Living expenses are appropriate expenses to use student loan money on. Parent loans are taken out by the parents and paid back by the parents, the student has no obligation on these loans. So while the parents may be violating the terms by using the money for THEIR expenses not the student's, the student is not going to have to pay the money back and won't have her credit affected by them either.

If the amount of time she spends working is interfering with her studies, I would suggest she take out her own student loans, in her own name, for her living expenses.
 
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Antigone*

Senior Member
Arynella said:
What is the name of your state (only U.S. law)? Maryland/Pennsylvania

My sister in law is in her senior year of college. Her parents co-sign a Parent Plus loan every year to supposedly pay for her living expenses. However, they have the money sent to their personal accounts and then use it for their own personal expenses. She's left hanging every semester. This year, she'll be working three jobs just be able to eat and is making herself sick over whether or not her rent will get paid. Does she have any sort of legal recourse for getting her parents to use her loans for her living expenses?

This is infuriating for me to watch and I just feel like there should be something she can do.
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So why doesn't your SIL support herself?
 
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Arynella

Junior Member
ecmst12 said:
So while the parents may be violating the terms by using the money for THEIR expenses not the student's, the student is not going to have to pay the money back and won't have her credit affected by them either.
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Is there anything that can be done about them violating the terms?

ecmst12 said:
If the amount of time she spends working is interfering with her studies, I would suggest she take out her own student loans, in her own name, for her living expenses.
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I had told her to look into a private loan of her own, but she insists she doesn't have enough credit. I'll tell her again, though. If nothing else, she can just check.

Thank you!
 
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Antigone*

Senior Member
Arynella said:
Is there anything that can be done about them violating the terms?



I had told her to look into a private loan of her own, but she insists she doesn't have enough credit. I'll tell her again, though. If nothing else, she can just check.

Thank you!
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Look, mom and dad have to pay the money back. If you want to help SIL, then you loan her money or encourage her to get a job. Mom and dad have done their job and she just needs to do hers.
 
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csi7

Senior Member
Here's my question. If it is a parent plus loan then it is not a co-signed loan. The system has switched from parent plus loans to co-signed loans recently, I believe.
If, it is a co-signed loan and her parents are receiving the funds from the co-signing of the loans, than that is fraud for the funds.
It is fraud because the federal funds are to be used for the students' living expenses, not the parents. Plus, if it is a co-signed loan, student is liable.

If it is a parent plus loan and student is not receiving funds from the loan, how did the loan get approved for parent plus purposes. All the parent plus loans I've ever signed all went to the school, except for the living expenses, and that was placed into a specific account with receipts for final disbursement.

Her options are to take out additional loan(s) to complete the senior year, to ask for federal fund audit of all of her student loans through a congressional inquiry, to verify she did NOT co-sign the loans and then make some choices from the answers.
 
Zigner

Zigner

Senior Member, Non-Attorney
Arynella said:
She's already working three jobs, plus internships. Her parents agreed to let her rent an apartment with friends because it was cheaper than paying for a dorm.
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Who pays the rent? If the parents, then what's the problem? If it's your Sister-in-Law, then why worry about whether or not her parents "let" her move in to an apartment?
 
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Arynella

Junior Member
Zigner said:
Who pays the rent? If the parents, then what's the problem? If it's your Sister-in-Law, then why worry about whether or not her parents "let" her move in to an apartment?
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Her parents are supposed to be paying her rent with the loans and aren't. That's the problem.
 
A

Arynella

Junior Member
csi7 said:
Here's my question. If it is a parent plus loan then it is not a co-signed loan. The system has switched from parent plus loans to co-signed loans recently, I believe.
If, it is a co-signed loan and her parents are receiving the funds from the co-signing of the loans, than that is fraud for the funds.
It is fraud because the federal funds are to be used for the students' living expenses, not the parents. Plus, if it is a co-signed loan, student is liable.

If it is a parent plus loan and student is not receiving funds from the loan, how did the loan get approved for parent plus purposes. All the parent plus loans I've ever signed all went to the school, except for the living expenses, and that was placed into a specific account with receipts for final disbursement.

Her options are to take out additional loan(s) to complete the senior year, to ask for federal fund audit of all of her student loans through a congressional inquiry, to verify she did NOT co-sign the loans and then make some choices from the answers.
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I'll double check with her and find out the specifics of the loans.
 
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