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A Parent PLUS Loan is a Federally funded student loan. Parent PLUS loans were created to allow parents to borrow money to fund their child's higher education. It is primarily for the parents of undergraduates who are their dependents.
These loans are given out based on the parent's credit. The interest rates are fixed and you don't have to repay it until after the second disbursement.
Am I Eligible?:
-Good Credit History: Parents taking out this loan must have good credit.
-Enrolled at Least Half Time: You are required to be attending an approved college or university at least half time. "Half-time" usually means you're taking six or more credit hours each semester.
-FAFSA: Typically, you are required to complete the Free Application for Federal Student Aid. Most schools will require this but some will not. Check with your school's financial aid office to see if yours does. If they do, you can fill one out online at FAFSA.gov.
-US citizen: You must be a US citizen, permanent resident, or citizen of American Samoa or Swain's Island.
What are the Benefits?:
-The best benefit is that parents are able to borrow money to help pay for their child's education.
-These loans have have a maximum interest rate that is set by the Federal Government. The interest rate on the PLUS loan is fixed at 8.5% as of July 1, 2006.
-Private Lenders offer incentives such as interest reduction and cash rebates.
-Whether or not you receive a loan is based on credit history. This means you won't be turned down because your income is too high.
-A Federal PLUS Loan allows parents to borrow enough money to pay for tuition, room and board, supplies, lab expenses, and travel.
-Interest may be tax deductible.
How Much Can I Borrow?:
The amount of money you can borrow depends on what it costs you to go to school and how much other financial aid you are receiving. For example, if it costs you $8,000 a year to attend school and you have been given $2,000 in financial aid, your parents can borrow up to $6,000.
Once you have been approved the money is sent to your school. It's disbursed in at least two installments and used for tuition, fees, and housing. Any extra money is sent to your parents and it must be used for your education.
Repaying Your Parent PLUS Loan:
These loans must be repaid in less than ten years. If you must extend your repayment terms, consolidation is your only option.
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Category: Reference and EducationStudents Without Credit Can Use Their Parents was written by:Author:Jesse FisherAdded: Fri, 22 Jun 2007 21:35:10 -0400 This Article Has Been Read 180 times View all Jesse Fisher's articlesAbout the Author: Author Jesse Fisher likes composing articles for his clients including Transamerican Medical, a business that resells Philips Medical equipment and parts. See also the Imaging Centers; online directory. (You may republish this article online IF all links are kept intact.) |
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