Financial Aid for Parents and Graduates
A PLUS loan is a low-interest student loan offered by the U.S. Department of Education for both graduate students and parents through Direct Loan Program (DLP). Abbreviation PLUS means Parent Loans for Undergraduate Students.
Federal Direct PLUS loans have can be divided into two subtypes (differing by borrowers): PLUS loans for parents and PLUS loans for graduate and professional degree students. The existence of different repayment plans makes this type of financial aid popular among borrowers. In addition, low interest rates appeal more graduate students to consider Federal PLUS loans as a primary option.
PLUS Loans For Parents
Direct PLUS loan program for parents has eligibility requirements for borrowers. In order to qualify for a PLUS loan for parents:
- The parent borrower must be biological parent of the student. The main mission of PLUS loans for parents is provide money for parents to help them with paying for children’s tuition. In such circumstances it’s obvious that parents must be biological.
- The parent borrower must have good credit score. A credit check is a part of the system. It’s important factor that plays an important role in getting approved. However if a parent does not have good credit history there is still a chance to get the loan. All you need to do is to find a person who you trust (and who trusts you) and ask him to endorse the loan. In other words you need a creditworthy cosigner.
- The student and parent must be U.S. citizens or eligible noncitizens.
Applying for Parent PLUS Loans
To apply for a Parent PLUS Loan it’s necessary to complete a Direct PLUS Loan Application and Master Promissory Note (MPN). The MPN is a legal document in which the borrower promises to repay the loan and any accrued interest and fees to the Department of Education.
Contact your financial aid office in your children’s school and where you can get more instructions on applying. Ask for a Direct PLUS loan application and find out if there’s an option of completing all documents online.
Parent PLUS Loans Summary
- Fixed interest rate – 7.9%
- Annual limit – equals the cost of attendance minus any other financial aid the student receives
- 3 repayment plans: standard, extended, and graduated – 10-25 years
- Additional fee – 4% of the loan amount, deducted proportionately each time a loan disbursement is made.
- Can be cancelled
Grad PLUS Loans
The second subtype of Direct PLUS loans is a PLUS loan for graduate and professional degree students. Graduate and professional students may borrow toward the cost of their tuition with the help of this loan. Low interest rates can be really appealing for potential borrowers and it’s a great advantage. However at some point of view, these loans can be risky (especially if you have previous student loan debt). In this case there’s possibility to have even more debts in the form of loans that must be paid. Sometimes it can be really difficult to pay.
Are You Eligible
Direct PLUS loans for graduate and professional students have eligibility requirements that are similar with parent PLUS loans. Before you apply it’s very important to be eligible in order to be confident that you qualify for this type of aid. A potential borrower must be:
- Graduate or professional degree student;
- Independent of parents;
- U.S. citizen or eligible noncitizen;
- Without adverse credit history.
A borrower could borrow an amount equal to the tuition cost minus any other additional funding (for example, scholarships). Applying for the both types of student PLUS loans is the same.
Grad PLUS Loans Summary
- Fixed interest rate – 7.9%
- Several repayment plans: 10-25 years
- Additional fee – 4% of the loan amount, deducted proportionately each time a loan disbursement is made.
- Can be cancelled
Federal PLUS Student Loans and Bad Credit History
One of the main requirements is to have good credit history to qualify for college PLUS Loans. Credit check is the part of the whole process and a borrower could not escape it.
However according to terms and conditions of the Direct PLUS Loan Program if a borrower does not pass a credit check (because of a bad credit score) he or she may still receive a loan if someone agrees to take responsibility a borrower. In other words if you want to get a PLUS loan even if you have adverse credit history you need a creditworthy cosigner.
A cosigner is a person you trust and who trust you. In most cases cosigners are friends, parents or relatives i.e. people who you respect and be honest with. Good creditworthy cosigner will help you to get the loan you want and establish or improve your own credit history.
