Parents PLUS Loans, FFEL and Direct Loans!Parents PLUS Loans are are a part of the Federal student aid program. They are available to parents of college students to help pay educational expenses. There are two versions of the Parents PLUS Loan. Through the Direct Loan Program, your loan funds will be sent directly to your child's school from the U.S. Department of Education. This is also known as the William D. Ford Federal Direct Loan Program. If you are receiving your loan through the Federal Family Education Loan (FFEL) Program then a bank, credit union or other lender will provide the funds to the school. The school may send you a disbursement check to be signed and returned.
Parents PLUS Loans issued after July 1, 2006, have a fixed interest rate, 8.50% for the FFEL PLUS Loans and 7.90% for the Direct PLUS Loans. The interest is charged from the time of disbursement until the loan is paid off. There is also a fee of up to 4% charged upon disbursment of the loan. For the FFEL, the fee is split between the government and the state guaranty agency. For the Direct loan, the entire fee is paid to the government.
There is one big difference between PLUS loans and Stafford loans. Approval for the PLUS loans will require that the borrowers pass a credit check. Should they fail to pass, there is still a chance to get the loan by having someone else endorse (co-sign) the loan. This means they would be accepting responsibility for repaying the loan if your parents defaulted for any reason.
Maximum Loan AmountsThe maximum amount of the PLUS loan will equal your cost of attendance minus any financial aid you receive.
Parents can choose to begin repaying the loan either 60 days after receiving it or waiting until the student is not in school at least half time for six months. The interest begins accumulating immediately, so waiting for the latter time will mean that the balance to repay will have increased significantly.
To apply for an FFEL PLUS Loan, your parents must submit an application which is available from your school, lender, or your state guaranty agency. The school will then fill out it's portion of the application and then it will be sent to the lender for evaluation.
To apply for a Direct PLUS Loan, your parents must complete an application and promissory note, which are contained in a single form available at your school’s financial aid office.
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