What is a Parent Plus Loan?
Many parents decide to borrow money using a Parent PLUS loan in order to aid them in covering the cost of their child’s education that they’re not able to meet up front. If you’re thinking about this option then it is absolutely essential that you are well aware of all of the metrics of taking out this type of loan and what it means for your child’s education. Parent PLUS loans are a fixed-interest loan that is federally guaranteed to those parents who are credit-worthy and have dependent students. In most cases the loan will not appear on your award letter, however will be added on to the financial aid package.
Who is Able to Take Out a Parent Plus Loan
Adoptive or biological parents, and in some cases stepparents of dependent students can apply to take out this type of loan. Keep in mind that students are considered to be dependent unless they are married, are at least 24 years old, are a veteran, graduate student, have children, are part of the arm forces, ward of the court, homeless or an orphan. Both the student and parent must be able to meet a number of different general eligibility requirements in order to gain access to a parent PLUS loan, and the parent must have a decent credit rating.
How To Apply
The student must first submit their FASFA. After this, the parent has to request a Parent Plus Loan, as well as sign a Master Promissory Note using his or her own information online by heading to studentloans.gov. Keep in mind that the Parent Plus loan application for the 2015-2016 school year has been made available since April 6th, however the school will often not certify loans until June. This means that if the parent is approved for the Parent Plus loan they can see whether or not they’ve been approved for it, however it will often not be added on to the student’s financial aid award until later in the summer
What Do Parents Do If They’re Denied?
Parents that are denied from gaining a Parent PLUS loan due to the fact that they have adverse credit can reapply using a cosigner who is credit-worthy. They may also appeal the denial through the Department of Education if he or she is under extenuating circumstances that are related to their finances. Lastly, parents have the option of getting in contact with the school’s office in order to inquire about an additional amount put towards a direct unsubsidized loan that the student may be eligible for.
Parent PLUS Loan Terms
Parent PLUS loans are given out by the U.S. department of Education. Parents are able to take out the loan for as much as the cost of attendance minus any financial aid that the student receives. The interest rates on these types of loans are 7.21% fixed for those loans that were taken out for the 2014-2015, and the 2015-2016 school year with interest rates being announced within the coming month. Keep in mind that the interest will start to accrue as soon as the loan is disbursed to the school.
Can Parents Transfer Their Parent Plus Loan to the Student?
The parent cannot transfer the loan over to the student at any time. The parent is responsible for repaying the loan no matter what the circumstances are. However, if the parent finds that they’re unable to pay the loan down the road then they may be able to request a forbearance or deferment on the loan. This means that the parent can postpone making payments for a certain time period. Making a request for a forbearance or deferment must be made directly with the loan provider.