Parent PLUS- A Low Interest Loan

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What is a Parent PLUS Loan?

A Parent PLUS Loan is a Federally funded student loan. Parent PLUS Loans enable parents to borrow money to pay the education expenses of their child who is a dependent undergraduate student.

Parent PLUS loans are given out based on the parent's credit. Interest rates are fixed and you don't have to repay it until after the second disbursement.

Am I Eligible?

Good Credit: Parents taking out this loan must have good credit.
Enrolled at Least Half Time: You are required to be attending an approved college or university at least half time. This generally means you're taking six or more credit hours each semester.
FAFSA: Normally, you are required to complete the Free Application for Federal Student Aid, however, some schools do not require this. You can ask your school's financial aid office if they require a FAFSA for Parent PLUS loans.
US citizen: You must either be a US citizen or permanent resident. You can also be from American Samoa or Swain's Island.

What's so Good About a Parent PLUS Loan?

The best benefit of the Parent PLUS loan is that parents are able to borrow money 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.
Whether or not you receive a loan is based on your credit history. You can't be turned down for making too much money.
A Federal PLUS Loan allows parents to borrow enough money to pay for tuition, room and board, supplies, lab expenses, and travel.
Interest could be tax deductible.

Exactly How Big can my Loan Be?

You can borrow the amount of your educational costs minus any other financial aid. For example, if you will be paying $8,000 a year to attend school and you have $2,000 in financial aid, your parents can borrow no more than $6,000.

Once you have been approved the money is sent to your school. It is then disbursed in at least two installments and used to pay for tuition, fees, and room and board. Any extra money is sent 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 terms, consolidation is recommended.

About the Author A college student herself, Elise Fisher loves writing articles for her website About-Student-Loans.com. Be sure to check out the Stafford Student Loans page!