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.
Parent PLUS loans are given to parents with good credit histories. Interest rates are fixed and you don't have to repay it until after the 2nd disbursement.
What are the Requirements?
-Good Credit: Parents taking out this loan must have good credit.
-Enrolled at Least Half Time: You must be enrolled in an approved college or university no less than half time. "Half-time" usually means you are enrolled in six or more credit hours each semester.
-Submit a FAFSA: Typically, you must 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 greatest benefit of the Parent PLUS loan is that parents are able to get a loan to assist their child in financing their higher education.
-Parent PLUS loans have federally guaranteed low interest. The current interest rate (as of July 1, 2006) is 8.5%.
-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.
How Much Can I Borrow?
You can borrow the amount of your educational costs minus any other financial aid. For instance, if it costs you $8,000 a year to attend school and you have $2,000 in financial aid, the most your parents can borrow is $6,000.
Once you have been approved the money is sent to your school. It's disbursed in no less than two installments and used to pay for tuition, fees, and housing. Any extra money is mailed to your parents to be used for your other educational needs.
Repayment:
Parent PLUS loans must be repaid in under 10 years. If you need to extend your repayment, consolidation is your only option.
NOTE: Use of this article requires links to be intact. ====================================================[ END ]====