LelaCHOICE Common Questions

Parent Loan

 

Should I apply for a supplemental LelaCHOICE Parent Loan instead of a federal Direct PLUS Loan?

Choosing to apply for either a non-federal, supplemental (private) parent loan or the federal direct parent PLUS loan is a personal decision. The federal direct PLUS loan has some but not all the repayment benefits of federal direct loans for students. It has one interest rate for all applicants and includes an up-front fee of more than 4%. The rate for supplemental, private loans, like the LelaCHOICE Parent Loan, is based on your credit and currently does not have any upfront fees. In addition, we, Lela, as a lender offers our own repayment benefits and we do not capitalize any interest at any time. It’s important to understand the differences before deciding which is best for your circumstances.

Can my student cosign the LelaCHOICE Parent Loan?

No. Students cannot apply for or cosign an application for the College Family Loan. The student has no obligation to repay this loan, and it is not transferrable to the student after he or she leaves school. The parent applicant does have the option of adding another (non- student) cosigner, if they do not qualify based on the program criteria or if they would like to see if they qualify for a better rate, if they are not in the top credit tier.

Am I eligible for a LelaCHOICE Parent Loan?

• Monthly payments for approved credit (mortgages, rent, car loans, credit cards and other forms of credit, including this loan application) that do not exceed 40% of gross monthly income (if a mortgage or rent is not included, debt-to-income ratio cannot exceed 25%). All student loan debt will be treated as though it is in repayment.
• Continuous employment over the last two years. (This requirement may be waived for retirees, disabled persons or those receiving a verified income.)
• A FICO score of at least 670. (The FICO score used is the TransUnion FICO Score 4, which is based on data from TransUnion and may be different from other credit scores. FICO is a registered trademark of the Fair Isaac Corporation.)
• No more than two accounts reporting 30-day delinquencies and no delinquencies of 60 days or more during the previous two years.
• No charge-offs, repossessions, collection accounts, judgments, foreclosures, garnishments by credit providers or tax liens.
• No previous bankruptcies.
• Not defaulted on any private or government student loan.

What are the credit and underwriting requirements to qualify for a LelaCHOICE Parent Loan?

The LelaCHOICE Parent Loan is for borrowers and one or more creditworthy cosigners.

To qualify, you or your cosigners must have:
• Monthly payments for approved credit (mortgages, rent, car loans, credit cards and other forms of credit, including this loan application) that do not exceed 40% of gross monthly income (if a mortgage or rent is not included, debt-to-income ratio cannot exceed 25%). All student loan debt will be treated as though it is in repayment.
• Continuous employment over the last two years. (This requirement may be waived for retirees, disabled persons or those receiving a verified income.)
• A FICO score of at least 670. (The FICO score used is the TransUnion FICO Score 4, which is based on data from TransUnion and may be different from other credit scores. FICO is a registered trademark of the Fair Isaac Corporation.)
• No more than two accounts reporting 30-day delinquencies and no delinquencies of 60 days or more during the previous two years.
• No charge-offs, repossessions, collection accounts, judgments, foreclosures, garnishments by credit providers or tax liens.
• No previous bankruptcies.
• Not defaulted on any private or government student loan.

Note: For joint cosigned LelaCHOICE Parent Loans, at least one cosigner must meet all credit underwriting criteria with the exception of the debt-to-income ratio, which the cosigners may combine debt and income to calculate the debt-to-income ratio. For loans with only one cosigner, either the applicant or cosigner must meet all credit underwriting criteria with the exception of the debt-to-income ratio, which the applicant and cosigner may combine debt and income to calculate the debt-to-income ratio.

The list of criteria above may not be exhaustive. The Louisiana Education Loan Authority (Lela) may require you or your cosigners to meet additional criteria in order to qualify for a loan. Lela reserves the right to change the list of criteria in any way from time to time.

How much can I borrow with a LelaCHOICE Parent Loan?

You may borrow up to your student’s cost of attendance minus other aid each year. Your student’s college or university must certify that the amount you are requesting does not exceed this amount.

Can I reduce the interest rate I pay?

You can earn a 0.25% interest rate reduction by signing up to have principal and interest payments automatically withdrawn. The 0.25% interest rate reduction will apply once payments begin to be automatically deducted. The reduction will remain in effect as long as automatic payments continue without interruption during the repayment period. The 0.25% interest rate reduction will not lower the monthly payment amount but will instead reduce the interest amount that accrues. The interest rate reduction will be suspended during approved assistance or if automatic payments are rejected due to insufficient funds.

What happens to interest that is not paid?

Interest that is not paid during deferments or under other circumstances is not capitalized (or added to the principal balance of the loan) as with other student loans with other lenders. LelaCHOICE never capitalizes interest, which means you do not pay interest on interest, resulting in you paying less back.

What happens if I experience unexpected financial issues and am unable to make my payment?

You may qualify for assistance based on your situation. Please call us as soon as possible if you experience issues, so we can help you avoid delinquency.

What happens to my LelaCHOICE Parent Loan if I or my student dies or becomes permanently disabled?

In the unfortunate event of a borrower’s death or qualifying total and permanent disability, the Louisiana Education Loan Authority ( Lela) will forgive the loan and not require cosigners or the borrower’s estate to satisfy the loan obligation. Lela will also forgive the loan and not require the borrower or cosigners to satisfy the loan obligation if the student, for whom the loan funds were borrowed, dies or suffers a qualifying total and permanent disability.

A tax professional or the IRS can provide additional information about possible tax consequences of loan forgiveness.

If my cosigner dies or becomes permanently disabled, will you require me to find a new cosigner?

No; in the event of a cosigner’s death or qualifying total and permanent disability, you will not be required to find a new cosigner for an existing loan. In addition, if a cosigner suffers a qualifying total and permanent disability, the Louisiana Education Loan Authority (Lela) will release the cosigner from his or her obligation.

Does the Louisiana Education Loan Authority (Lela) service the LelaCHOICE Parent Loan?

Lela, a non-profit organization, is the owner of the loans and administrator of the program. Customer service for all loans will be provided by Aspire Servicing Center, a wholly owned subsidiary of Iowa Student Loan on behalf of Lela. Iowa Student loan is a non-profit entity.