Federal Parent Loan for Undergraduate Students (PLUS)

"Federal Parent Loan for Undergraduate Students (PLUS)" submitted by SchoolGrantsfor Editorial Team and last updated on Monday 9th January 2012

Federal PLUS Loan

Federal Parent Loans for Undergraduate Students (PLUS) are borrowed in the name of the parent. The interest rate varies, but is capped at 9%. Finding a lender for the PLUS loan shouldn't be a chore. The credit standards are not all that stringent. Most applicants receive approval for this loan.

Parent Loan for Undergraduate Students (PLUS)—is designed for parents of dependent students who want to help cover the cost of college without tapping into home equity, retirement savings or credit cards. PLUS loans are made to parent borrowers regardless of income level. Applying for a loan with a qualified co-signer—such as a parent, close relative or spouse—could improve your chances of being approved for a loan.

The Parent Loans for Undergraduate Students (PLUS) program enables parents who do not have an adverse credit history to borrow money to cover the education expenses of dependent undergraduate students. PLUS loans are available in both the Direct and FFEL programs, and the terms and benefits are identical. A 4 percent origination fee, paid by the borrower, is charged on all PLUS loans. However, FFEL lenders may waive this fee as a way of attracting business. If a parent is borrowing on behalf of a dependent undergraduate student, the student must also meet these general eligibility requirements.

Repayment of PLUS loans begins 60 days after the first or second disbursement (depending on the lender). The standard repayment period is 10 years. You may borrow up to the cost of attendance minus other financial aid including loans. Selecting a lender for a PLUS is the same as for the Stafford loans. If your school participates in Direct Lending, your lender will be the federal government. If you borrow through FFELP you will need to select a lender.

Why borrow using a PLUS? Well, one of the biggest advantages is spreading your costs over time. Some schools offer payment programs that vary in duration from 2 to 12 months. Usually you make 2 payments, one in the summer and another in the fall. Many times, it is financially difficult to come up with that kind of funding in two large sums. That's where the PLUS can make life easier for you. And don't worry about your credit. Find out if you qualify, you might be surprised. Then again, if you do not hope is not lost...

If you are denied a PLUS loan based on adverse credit reporting, your student may ask the financial aid office to consider him/her for additional Unsubsidized Stafford loan eligibility -- up to $4,000 for Freshman and Sophomores and $5,000 for Juniors or Seniors. The student will need to write a letter to the financial aid office, request Unsubsidized consideration and enclose a copy of the denial letter you received from the lender. PLUS loans are not based on income or assets. Payments should not debts delinquent 90 days or more. No defaulted loans, outstanding tax liens, unpaid judgments, bankruptcy, foreclosure or wage garnishment within the past five years.

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