Federal Parent PLUS loans are designed to help parents finance the cost of their child’s tuition and related educational expenses at approved colleges and universities. These loans can be for students taking at least half of the equivalent of full-time undergraduate or graduate classes and there is a credit check.
Read more to find out about these Parent PLUS loans.
Parent Plus Loan Advantages
- These are a greater help to a parent compared to other loans because the federal government guarantees the loan, reducing the interest rate, the monthly payments and the overall cost of the loan. Parents can afford to borrow enough to cover the costs of their son or daughter’s higher education.
- These direct parent plus loans can be large enough to pay the total expected costs for the four years of undergraduate school. Education costs are not just tuition, but include housing and other costs such as books and fees.
The available loan amount may be reduced by the amount of any other assistance the child receives in their own name.
The following information may help explain how parent plus loans coordinate with other resources to cover the overall expense of higher education.
PLUS Loan Coordination with Other Financing
- If the student has Stafford loans, scholarships or non-federally backed loans, the PLUS loan program can make up the difference needed to meet the expect costs for tuition, campus or off-campus housing and supplies.
Qualification and Processing Information for the Parent PLUS Loan
- There is no neediness criteria to meet in order to receive one of these loans, a boon to middle-class families that have trouble affording higher education costs, but whose offspring do not qualify for many needs-based scholarships and grants. The main qualification is credit history.
- PLUS loan interest rates were fixed at 7.9 percent in July 2009 and may vary.
- If you set up repayments via automatic debiting to your savings or checking account you receive a loan percentage-rate discount of .025 percent.
- There are loan origination fees: 3 percent plus a 1 percent federal default fee.
- Parent PLUS loans do not require collateral so the family home or other assets are not put at risk.
- Interest payments may be tax deductible.
Loan Limits
These are some general guidelines for how much aid is available through these loans.
Annual loan amounts are limited by any other financial aid received. If the cost of tuition and housing is $15,000 for the year, and your son or daughter has a $5,000 scholarship good for the year, the maximum Parent PLUS Loan amount available is $10,000.
