PLUS Loans for Parents - Student Loans
PLUS Loans for Parents : The Plus Loan – Parents’ Aid by iStudentLoan.com Editorial
The Federal Plus Loan – Parents’ Aid Defined
Plus Loans – Parents’ Aid is a student loan that can be granted to parents of dependent students. This loan, when granted will help pay for an eligible applicant’s post secondary educational expenses. This is applicable to dependent students of undergraduate courses. One condition is that such student needs to be registered half time in a qualified program at an accredited school. Such types of loans are made available by the United States Department of Education through the (FFELPSM) , otherwise known as the Federal Family Education Loan ProgramSM
This is also available through direct loan programs such as the William D. Ford Federal Direct Loan. Parents of eligible applicants can avail of either loan for an applicant within the same period of enrollment. However only one loan can be availed at one time. In order to be eligible, the parents of applicants should have a credit history that is up to standard.
Steps on how to avail of a Plus Loan – Parents’ Aid
Here are some important things to remember should parents decide to avail of a loan.
Parents of applicants need to submit PLUS loan applications for the corresponding loan of choice. For the FFEL Plus Loan, application forms can be availed at the university, state guarantee agency or lender. The form is sent to the lender for evaluation after the school completes its part of the application.
For parents who wish to avail of Direct Plus loans, parents should be able to accomplish a Direct PLUS loan application and submit a promissory note. Both should be in one form that the applicant can obtain from their school’s financial assistance office.
In order to avail of such loans, parents of applicants should first pass a credit check. Should parents fail the credit check, they will still be able to avail of a loan if a friend or relative agrees to endorse the loan. In such cases, the endorsers should promise to repay the loan should the parents of the applicant fail to do so.
Another exception also is that if parents of applicants will be able to establish acceptable explanations without passing the credit check. The applicant and the parents should be able to meet common eligibility requirements for federal student financial assistance.
How to borrow funds from the Loan
There is a limit to how much parents of an applicant can borrow from the PLUS loan. The usual computation is the total cost of attending the applicant’s school of choice excluding other financial aid that the applicant receives. For example, if an applicant’s cost of attendance amounts to $5,000 and he receives $3500 from other financial assistance sources, then his parents can borrow a maximum of $1500 in PLUS loans.
Where will the loan money be sent?
Upon approval, the funds will be coursed through the parents’ chosen lending institution to the student’s school of choice. There are cases where the Department of Education of the United States will send the money straight to the school. The school might also insist that the parents sign a check to disburse the funds and remit the money back to the school. This is usually done in several installments, the least of which is in two parts. None of the installment amounts will be more than one-half of the total loan amount. The money will be used to pay for tuition fees, board and lodging, and other school expenses.
Sources: Department of Education, see PLUS Loans page.
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