Parents taking student loan money for personal use

[ecmst12]

I suspect some of the details are being lost in the relating of her problems to the third party (OP).

 

[Arynella]

If the parents are paying her tuition and even SOME of her rent, then there is no fraud. The parent loan is reimbursing them for what they paid for her tuition.

Are the parents cosigned on her lease? Do they send checks to her landlord? Are they supposed to send her money so that she pays the rent herself? Not many people will rent to a college student without a cosigner, that means if the rent doesn't get paid the landlord is going to sue them for it. What exactly is the arrangement?

My SIL has a combination of scholarships and private loans that cover her tuition and books. Her parents then took out the PLUS loans to pay her room and board. When my SIL moved out of the dorms and into an apartment, they started keeping the PLUS loan money for themselves instead of paying her rent. They are supposed to send a check to her landlord, and I believe have cosigned on the lease, but I"ll have to double check the second part. I know they cosigned on her first apartment, but I don't know for certain if they did on the current one.

Last semester, she received a pre-eviction notice before her parents paid the rent, and then they took her paychecks to "pay them back" for it. She has a joint bank account with her parents for reasons that aren't entirely clear to me. I keep telling her to get her own account, but she has yet to listen and that isn't really relevant to the discussion anyway.

From what everyone says, it sounds to me like their personal use of the PLUS loan money is indeed considered fraudulent. What can be done about that?

 

[Arynella]

I suspect some of the details are being lost in the relating of her problems to the third party (OP).

Entirely possible, and in fact highly likely. My SIL's a smart kid but she's only 20.

 

[I'mTheFather]

From what everyone says, it sounds to me like their personal use of the PLUS loan money is indeed considered fraudulent. What can be done about that?

Well, actually, not everyone has said that. I will bet my last dollar that everyone will agree that you, as an uninvolved third party, are not privy to the facts. As such, my advice to you is to tell your SIL that if she wants help, she ought to sign up with her own account and ask her questions.

 

[ecmst12]

IF it is fraud and IF something is done about it, the end result is that the government will take the loan money back and force her parents to pay the loan back immediately and prevent them from taking out any more loans. None of which will help her in the slightest way to pay her rent.

 

[justalayman]

From what everyone says, it sounds to me like their personal use of the PLUS loan money is indeed considered fraudulent. What can be done about that?

I surely didn't say that. I said there might be a possibility of that. That is an issue between the borrower and the lender. I am not privy to their contract so I cannot say what stipulations are placed on the loan.

I specifically chose to not address that issue since, unless SIL is liable to pay back the money, it doesn't matter here.

 

[Arynella]

IF it is fraud and IF something is done about it, the end result is that the government will take the loan money back and force her parents to pay the loan back immediately and prevent them from taking out any more loans. None of which will help her in the slightest way to pay her rent.

Thank you.

 

[OHRoadwarrior]

http://www.direct.ed.gov/parent.html

It appears one requirement is the money be used to pay for student expenses at their school. See last paragraph in government link.

 

[justalayman]

http://www.direct.ed.gov/parent.html

It appears one requirement is the money be used to pay for student expenses at their school. See last paragraph in government link.

That's all well and good but does anybody really want to be involved in a person simply wanting to be a tattle tale because the parents are not assisting their child as OP believes they should be?

Sure what the parents are doing is wrong but it, in itself, does not affect OP or OP's friend. In the end, this seems to be about retribution more than concern for the action itself. I do have a problem with that.


Remember, this is what OP said:

Does she have any sort of legal recourse for getting her parents to use her loans for her living expenses?

 

[OHRoadwarrior]

That's all well and good but does anybody really want to be involved in a person simply wanting to be a tattle tale because the parents are not assisting their child as OP believes they should be?

Sure what the parents are doing is wrong but it, in itself, does not affect OP or OP's friend. In the end, this seems to be about retribution more than concern for the action itself. I do have a problem with that.


Remember, this is what OP said:

Just presenting the law. I don't have a dog in this fight.

 

[justalayman]

Just presenting the law. I don't have a dog in this fight.

actually, neither does OP or in reality, OP's SIL.

 

[Silverplum]

I can't believe you endorse student loan fraud.

I don't.

Like several others, I don't think SIL has a legal place in this. I linked valid info. That's not "endorsement of fraud."