Information on the Federal PLUS Loan
The Parent Loan for Undergraduate Students, or PLUS Loan, is a valuable student loan option for parents and grandparents who wish to help a student pay for college. This Federal loan program offers a low-interest loan with flexible payment plans.
The PLUS loan is an example of one more way in which educational monies can be accessed for college costs. It can be borrowed to cover costs of tuition, materials, and other college expenses that often become a burden.
Loan Criteria for Eligability
Biological parents, adoptive parents, grandparents and legal guardians are all eligible to apply for a PLUS Loan as long as the college student is a dependent.
The difference between the PLUS Loan and either the Stafford or the Perkins Loan is that a PLUS Loan is never made to a parent based on financial need. Anyone can apply. You must have a good credit record, though. Repayment of the loan begins 2-3 months after the loan has been disbursed and there are fees associated with late and missed payments as with all normal loans. Review our other section if you have bad credit and need a loan.
Advantages for Aiding College Education
In the past, many parents resorted to other investments, such as home equity loans, even second mortgages, to cover the cost of college expenses. The advantages to a PLUS loan, say most financial advisors, is that such a loan avoids the necessity of taking out other more high-interest loans, or refinancing a home to pay for college. The loan is immediately designed for college expenses and parents can save their alternative investment options for other needs. Unlike other loans, a PLUS loan requires no collateral.
Graduate PLUS Loan for Your Continuing Education
As of July 2006, a new PLUS Loan became available: the Graduate PLUS Loan. The borrower need not be a parent. Like the original PLUS Loan, the Graduate version covers all costs of college, including housing and course materials. Interest rates are fixed and an approval on a loan hinges on the borrower’s good credit. This loan is open to all graduate students regardless of financial need.
