PLUS Loans – Federal loan designed for higher education

PLUS LoansA Plus loan could also be referred to as a Direct PLUS Loans, which is a federal loan made and designed for higher education and offered to parents of undergraduate, graduate, or professional students. The Acronym PLUS Loans stands for Parent Loan for Undergraduate Students. Because it is a federal student loan, it is offered through the U.S. Department of Education’s William D. Ford Federal Direct Loan Program. The need for Direct hence means it is a product of government and it is coming directly from the government. Thus, the government in this context is the lender.

WHAT YOU SHOULD KNOW

  • Do you know that?.  In as much as PLUS loans stand for Parent Loan for Undergraduate Students, it still benefits graduates. Or professional students?
  • Do you know with a PLUS loan you to borrow up to the full cost of college, aside from other financial aid provisions?
  • Since PLUS loans is a federal student loan, it is not exempted from offering varieties of flexible repayment options.

For parents to be eligible for a PLUS loan, the student must enroll or have been enrolled in at least half-time with the school that supports the Federal Direct Loan Program. The way it works is that the PLUS loan money first gets to the institution to share it over the necessary expenses such as tuition, room and board, school fees. And at the end of it, the remaining funds are disbursed directly to the parents of the student.

PLUS loan is a type of loan with a fixed interest rate maintained for the entire loan period. The interest on federal loans including PLUS loan has been suspended during the crisis o Coronavirus by President Trump on March 13, 2020.

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How to Qualify For a Plus Loan

First and famous, the parents of the student must fill out the Free Application for Federal Student (FAFSA), under which a credit check will be passed on. Now for graduate or professional degree student who wishes to borrow PLUS loan will be doing that on their behalf. This is generally known as grad PLUS. It is actually the opposite of a Parent PLUS loan.

To obtain a PLUS loan, the student must be totally dependent on their parent. This is because both parties at each end have eligibility roles to play such as permanent resident alien, adverse credit history, etc. Once they have all it takes, they have the chance of getting PLUS loans. But if not so, The parent may have to indicate or obtain an endorser for the loan.

Grad PLUS may really have the same requirements but it just different by allowing students to take responsibilities.

Advantages

  • Since it leverages parents to borrow as a whole as they needed for the child’s education, it stands as the number one benefit of PLUS loan than many other loans.
  • You can borrow PLUS loans without been asked of the financial need.
  • PLUS loans are relatively low-interest rates and nevertheless, it is a fixed interest-based loan.
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Disadvantages

  • It demands that parents must be passed through credit checks to determine their eligibility for PLUS loans.
  • There is a loan fee charged over a PLUS loan and will be deducted from each disbursement you receive.
  • The repayment responsibility cannot be transferred to the student even after he//she must have graduated and had something doing.

Repaying PLUS Loans

Repayment of PLUS Loan begins as soon as the entire loan has been disbursed. So you can start repaying your loans while a student is in school or seek to defragment. For better advantage, you should better start repaying your loans while the student is still in school or request a deferment.

There are several repayment plans for parent PLUS loans. They include:

  • Standard repayment plan: This plan gets you into paying monthly fixed payments up to 10 years. But in the midst of one parent having more than one Plus loan, you can extend the repayment period to up to 30 years.
  • Graduated repayment plan: this plan will really fluctuate. Payments are made over a period of up to 10 years but interest will ever move from the low to high after two years.
  • Extended repayment plan: This is obtainable for borrowers who owe more than $30,000 indirect loans. This will only leverage you with 25 years to pay off your loans either by fixed or graduated payments.

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