Everything You Need to Know About Parent PLUS Loan Information
Paying for college education can be financially draining for parents and students alike. One excellent option to consider is the Parent PLUS Loan. It is a type of federal loan offered to parents of dependent undergraduate students to help cover educational expenses.
With its benefits and drawbacks, it is essential to understand what the Parent PLUS Loan is, its requirements, and how it works before deciding on it. In this article, we’ll cover everything you need to know about this type of student loan.
Understanding Parent PLUS Loans
The Parent PLUS Loan is a federal student loan provided to parents of dependent students attending college or university. This loan covers additional expenses beyond the student’s financial aid, such as tuition, room and board, books, and other education-related costs.
This loan’s primary advantage is that it is available regardless of the academic performance of the student. It is also different from other government loans, as it focuses on the applicant’s creditworthiness rather than their credit history. Additionally, repayment may be deferred until after graduation or when the student stops attending school, allowing more manageable payments in the long run.
Loan Eligibility and Requirements
To be eligible for the Parent PLUS Loan, you must be the parent of a dependent undergraduate student enrolled at least half-time in a school that participates in the federal student aid program. Your credit history must also be satisfactory, with no significant negative marks such as default or bankruptcy in the last five years.
The loan’s maximum eligibility amount is the total cost of attendance, minus any financial assistance that the student has been awarded. Plus, the loan requires an origination fee of 4.228% deducted from the loan amount. It is worth noting that this interest rate is fixed and higher than other federal student loans.
Loan Repayment and Flexibility
Repayment of the Parent PLUS Loan typically starts 60 days after the loan’s full disbursement. However, you may defer payment while your child is still in school at least half-time. Additionally, interest accrues on the loan from the moment of disbursement, and interest capitalizes once your loan enters into repayment, adding to your overall balance.
One of the most significant advantages of the Parent PLUS loan is the available flexibility in repayment options. You can choose between the standard repayment plan, which is ten years of fixed payments, and other income-driven repayment plans that consider your income levels.
Conclusion
When considering the Parent PLUS Loan, it is crucial to understand its benefits and requirements. By taking on this federal student loan, parents can help their children with their education expenses while enjoying repayment flexibility.
Always remember that this loan requires sound financial planning to avoid ending up with massive debt burdens. Before applying for this loan or any other, ensure to research all the available options and consult with financial advisors to make an informed decision.
