Parent PLUS Loan
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What are PLUS Loans? | Advantages | Eligibility | Borrow Limits | Interest Rates | Loan Fees | Application Process | Disbursement of Funds What are Parent PLUS Loans?The Federal Parent Loan for Undergraduate Students (PLUS) is available through the Federal Family Education Loan Program (FFELP) to help you pay for the education of dependent children. A dependent child is defined as one who:
Advantages are:
EligibilityOnly one credit worthy parent is able to apply for a loan each academic year for their dependent undergraduate student. Credit worthy parent is defined as natural, adoptive or step-parent. The student must be enrolled in school at least half-time and must maintain Satisfactory Academic Progress. The Office of Financial Aid determines the amount of PLUS Loan eligibility in accordance with federal requirements. Eligibility for the PLUS loan depends on a modest credit check that determines if the parent has what is termed an “adverse credit history.” An “adverse credit history” is defined as being more than 90 days late on any debt or having any Title IV debt within the past five years subjected to default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off. Beginning July 1, 2008, new federal legislation will allow parents to choose to defer payments on a PLUS loan until six months after the date the student ceases to be enrolled at least half time. Accruing interest could either be paid by the parent borrower monthly or quarterly, or be capitalized quarterly.
In addition Special Provision for Parents Delinquent on Mortgage Payments have been made that will allow lenders to consider parents eligible for PLUS loans even if, during the period January 1, 2007, through December 31, 2009, the parents are or were:
No more than 180 days delinquent on a mortgage payment on primary residence No more than 180 days delinquent on any medical bill payments No more than 89 days delinquency on the repayment of "any other debt" How Much Can Be Borrowed?Parents may borrow up to their student's total cost of attendance less other financial aid received such as grants and scholarships. On the student’s financial aid award package this is listed as an “estimated PLUS Loan,” which will show you how much could potentially be applied for to be borrowed. The total cost of attendance is determined by the Office of Financial Aid based on an average cost for tuition, books, room and board, travel, and miscellaneous expenses for the academic year. It is important that each family fully understand how a PLUS Loan will impact them financially. Most financial experts advise that one should not incur debt (excluding mortgage debt) that results in total monthly payments (debt-to-income ratio) exceeding 20% of your monthly gross income. Interest RatesThe interest rate is fixed at 8.5%. Loan FeesParents are required to pay fees of up to 4% of the principal of the loan. These include an origination fee of 3%, charged by the federal government, plus a federal default fee of up to 1%, charged by the guarantee agencies. These fees are deducted from the principal at each disbursement. Example:
Currently, the federal default fee of 1% is being paid on behalf of the borrower by some lender partners. Please refer to our lender partner comparison chart for this information. How do my parents process a PLUS application?
Click here for online Parent PLUS Application Financial Aid Home | Undergraduate Aid |
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