The Parent Plus Loan is a federally funded direct parent loan available only to the parents of eligible dependent undergraduate students. The Federal Direct Student Loan provides a fixed interest rate plus a lower than average loan limit of $4000. Parents who wish to borrow a higher amount of money than the lower loan limit may apply through the Federal Family Education Loan Program (FFELP). The FFELP is a program that offers loans to persons in need of financial assistance. The FFELP has many loan programs for college, university, trade school, technical college, vocational school, and distance education.
There are two main types of parent PLUS loans. The first one is the subsidized parent PLUS loan, which pays the interest on behalf of the parent. The second one is an unsubsidized parent PLUS loan. Both of them come under the direct parent loan programs. These are the only two options available to a student dependent upon the breakup of the family unit and the starting of the dependent student’s college. Both of them have loan limits determined based on the individual financial needs of the student dependent.
To apply for either parent PLUS loans, the parent plus one must meet the following general eligibility requirements. In addition, the parent must be a citizen of the United States; the parent and dependent student must be a full-time college student who has attained a high school diploma or its equivalent; the parent plus one must not be filing bankruptcy; the parent and dependent student must have a cosigner who has met the specific cosigner requirements of each of the federal student aid programs that the parent and student qualify for, and the parent plus one must have income that meets the federal poverty guidelines.
What is a parent plus loan
It is important to note that both parents need to meet these eligibility requirements to apply for any of the parents’ plus loans. The primary difference between these two parent-student loans lies in their terms of availability. The federal government loans have longer repayment terms, while the private loans have shorter repayment terms. However, both of them require that parents prove financial need before the start of the grace period. In other words, if a parent qualifies for federal student aid but does not have enough income to meet the specified income requirements of the program, they would still have to repay the parent PLUS loan until their child graduates or until they achieve the alternate eligible age. Thus, both parent plus loans have different eligibility requirements.
Most private parent plus loan interest rates are locked in after the first six months grace period. There are also parent plus loan interest rates that have been frozen during the entire academic year. The longer the grace period, the lower the interest rates become. This is also true for parent PLUS loans that are obtained before attaining the six-month grace period. Private lenders tend to charge more interest during the academic year as well.
Parent plus loan calculator
Federal parent plus loans can be used to supplement the federal student loans, or they can be used to pay off the entire cost of attendance for one beneficiary. As mentioned earlier, parents need to meet specific income requirements before the start of the six-month grace period. Eligibility requirements for parent PLUS loans are based on the financial need of the applicant. If an individual has perfect credit, is a cosigner with good credit, and is a full-time student, they can quickly secure approval to consolidate parent plus loans into one master promissory note (MPN).
A master promissory note (MPN) allows the parent PLUS loan borrower to borrow up to a maximum of five hundred thousand dollars. Of course, loan funds from the master promissory note cannot be used to borrow money for any other purpose. In addition, if the parent PLUS loan borrower fails to repay the loan, their credit rating will suffer. To borrow money under a parent PLUS loan, the parent must be a U.S. citizen, and they must have a cosigner with a good credit rating and adequate income to qualify. In other words, if an individual has a parent PLUS loan, they may borrow money without being considered as a dependent undergraduate student Stafford loan borrower.
In terms of repayment, once the parent PLUS loan begins, the borrower must repay the PLUS loan using the approved loan repayment plan. In most cases, the borrower must make at least half-time payments each month until they graduate. After graduation, the borrower must be in default of the loan if they wish to obtain a post-graduation visa. However, a student must be in default of the loan for at least six months before they can apply for a federal student loan that does not require a cosigner.