What is a PLUS Loan?

Pay for College with Student Loans and Parent PLUS Loans


Written by Gaurav Bhola, MSM on December 28, 2008

As the cost of college and university education rises, so does the necessity for student loans. School loans are critical for subsidizing higher education for many students. In addition to college students, parents can borrow funds to help their children with college tuition and other educational expenses. The PLUS loan is accessible to parents of children registered at least half time in an eligible school program.

Parent PLUS Loans can aid parents provide upto 100% of college and university costs. Here are important things to know about PLUS loans.

Parent PLUS loan
The PLUS loan is non-need-based student loan available for higher education expenses.

Loan borrower
The school loan program is provided only to parents of part-time students. The government defines a parent as a custodial or non-custodial parent, or a stepparent. Under federal student loan guidelines, a parent is not defined as a legal relative or guardian.

Eligibility criteria

Parent:

  • Responsible for the loan repayment on behalf of the dependent student.
  • Must meet certain federally creditworthiness standards.

Student:

  • At least 6 credits enrollment is considered part-time.
  • Must satisfy specific academic requirements.

Parents & Student are:

  • Eligible legal non-U.S. residents or U.S. citizens.
  • Not current defaults for previous college education loans

Annual loan limits
The PLUS loan annual limits are equal to the total college educational costs minus all other financial aid (other loans, grants and scholarships). For example, if educational cost is $12,000 and you receive $2,000 of financial aid, your parents finance $10,000 of educational expenses.

Loan repayment terms
Loan interest starts to accrue after the disbursement. The repayment of the loan begins 60 days after final payout for the student loan. The repayment is inclusive of accumulated principle and interest.

If loan is denied due to Credit
If the application is declined due to creditworthiness:

  • Get a co-signer for the loan meets the federal creditworthiness standards

The PLUS loan is a great bonus for students who have exhausted all other options of additional school loan funding.

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