The Parent PLUS Loan is a student loan that is sponsored by the federal government. Parent PLUS Loans enable parents to borrow money to pay the education expenses of their child who is a dependent undergraduate student.
These loans are given out based on the parent's credit. Interest rates are fixed and you don't have to repay it until after the second disbursement.
What are the Requirements?
-Good Credit: Parents taking out this loan must have good credit.
-Half-Time Enrollment: You must be enrolled in an approved college or university no less than half time. This usually means you're taking at least 6 credit hours per semester.
-Submit a FAFSA: Normally, you must submit a Free Application for Federal Student Aid, however, some schools do not require this. Check with your school's financial aid office to see if yours does.
-US citizen: You must either be a US citizen or permanent resident. You can also be from American Samoa or Swain's Island.
What's so Good About a Parent PLUS Loan?:
-The best benefit is that parents are able to get a loan to help pay for their child's education.
-These loans have federally guaranteed low interest. 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.
-It's not based on income but 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.
Exactly How Big can my Loan Be?
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 you will be paying $8,000 per year to attend school and you have been given $2,000 in financial aid, your parents can borrow up to $6,000.
The money is given directly to your school. It is then disbursed in no less than two installments and used to pay for tuition, fees, and housing. Any extra money is mailed to your parents and it must be used for your education.
Repayment:
These loans must be repaid in under ten years. If you must extend your repayment, consolidation is your only option.
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To learn more about other low interest loans please visit our Low Interest Student Loans page. A college student herself, Elise Fisher enjoys writing articles to help college students learn more About-Student-Loans.com.