Federal Direct PLUS Loan for parents is a popular option for families who wish to use a low-interest loan as a means of covering their student's college expenses. A parent can borrow up to the total cost of education less any financial aid/loans the students has been awarded.
Who can Borrow the PLUS loan? Biological or adoptive parents of full-time or half-time dependent undergraduate students; not contingent upon income level. consideration For Direct PLUS loan includes a required credit check. Parents and students must be U.S. citizens or eligible non-citizens. FAFSA for student must be filed.
How much can a parent borrow? Up to the total cost of educational expenses less other financial aid accepted by the student. No maximum loan amount per borrower.
Interest Rate: The interest rate for the 2012-2013 year was fixed at 7.9%. Interest rates for the upcoming 2013-2014 to be advised. The origination fee of 4.204% is deducted from the loan prior to its disbursement.
Repayment Terms: Payment of principal and interest begins 45 days after disbursement of the loan with a minimum monthly payment of $50.00. Repayment may last up to 10 years. You may prepay at any time without penalty. Loan consolidation and graduated repayment options are available.
Advantages to Borrowing a Federal Direct PLUS loan.....
When to Apply: In most cases, applicants should allow three weeks of processing time before the funds are needed. However, if the funds are needed for the beginning of the fall semester, Direct PLUS Loan applications should be made by mid-June. If funds are needed for the beginning of the spring semester, apply in mid November. It is also best to wait until the student's aid award is complete so that you know the amount of loan eligibility.
Note: Loan fees of 4.204% will be deducted from the amount you borrow so please keep this in mind when calculating the amount you need to borrow.
The school will originate your loan and schedule two equal disbursements; fall and spring.