Understanding Parent Plus Loan

By Yusi Setiawati

Parent PLUS Loan is a federal government loan or federal parent plus loan which is one of the best student loans option. It offers  low interest rate, no hidden cost, and no extra fees to deal with. With parent plus loan, parents can borrow money to pay education expenses of their children who is a dependent undergraduate student.

The acronym of PLUS is Parental Loans for Undergraduate Students. It means these loans are designed for parents who their college students need extra money. PLUS loans are supplied by financial lenders like banks and credit unions.

Many people like parents plus loan because it covers additional costs such as book, living accommodation,  and meal plans. Many other student loans usually only cover cost of tuition.

One thing you must remember when applying Parent Plus Loan is checking your credit score beforehand. Parent plus loan are given out based on parents’ credit. Low credit rating can affect your ability to get loan. The interest rates are fixed and repayment begins after second disbursement.

If you want to enroll Parent Plus Loan program, you should meet these requirements:

1. To take this parent plus loan, you must have good credit
2. You must fulfill half-time enrollment. It is mean that you are required to enrolled in a college or university at least half time or at least 6 credit hours each semester.
3. You are required to complete FAFSA (Free Application for Federal Student Aid). You should check with your school’s financial aid office.
4. You must be a US citizen, permanent resident, or citizen of American Samoa or Swain’s Island.

Here are parent plus loan benefits:

1. Parents are able to borrow money to assist their child in financing their higher education.
2. Federal Government is set maximum interest rate for Parent Plus Loan.
3. No collateral necessary
4. Parent plus loans based on your credit history, not based on income. You can’t be turned down for making too much money.
5. In order to cover tuition, housing, meals, books, and supplies, you can borrow funds.
6. Interest could be tax deductible.

After you have been approved Parent Plus loan, the money will be sent to your school. At least two installments it is disbursed and used for tuition, room, fees, and board. If there is any money left over, it will be sent to your parents to be used for your other educational needs.

You must repaid Parent Plus loans in under 10 years. To extend your repayment, parent plus loan consolidation is recommended.

If you consolidation your parent plus loan, you could take advantage of a substantially lower payment each month. When you make the move, you will be able to get a lower interest rate almost instantly.

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