Part One: Exactly what Federal Parent PLUS Loan, and how do I get one?
Now that you’ve deposited at a university, it is time to figure out how you are going to pay the particular bill. One of the many ways parents will help their students pay their university costs is with a Federal Parent PLUS Loan . As the name suggests, this is a loan where the parents are the particular borrowers . The PLUS Loan is a federal loan that provides debtors with protections not often found in the particular private loan market, including many attractive repayment options, fixed rates of interest with predictable payments, and deferment and forbearance options during short-term hardships.
In recent years, the particular Parent PLUS loan has offered a fixed rate of interest . It is currently based on the Ten-year Treasury Note plus 4. six percent with a cap of ten. 5 percent. The current interest rate is six. 41 percent and will be reset upon July 1 st for the 2014-2015 school yr. Borrowers should borrow for the entire academic year, keeping in mind that they will need to reapply each year. A credit review is performed each year because borrowers are not immediately approved for the entire cost of the education. Moms and dads must begin to repay the IN ADDITION Loan after it is fully disbursed for the academic year, but obligations can be deferred upon request. Though the PLUS Loan is borrowed twelve months at a time, parents should consider the cost of credit for the entire college education before signing on the dotted line.
Parents may have seen the PLUS loan offered as part of their child’s financial aid bundle, but they will still need to apply for this loan. It’s vital that you note that the PLUS Loan continues to be an option for parents at educational institutions that did not include it included in the student’s financial aid package. However , some parents may not qualify for this loan; bankruptcies, liens, and outstanding past due bills on a credit report can impact the opportunity to borrow a PLUS Loan.
To be approved for a Parent IN ADDITION Loan, the borrower must be the particular parent of the dependent college bound student who is or will be signed up at least half time in a degree or even certificate granting program. Families are usually directed to apply for the PLUS loan through the college their student is definitely attending. Approval is dependent on a credit check that determines if the parent posseses an adverse credit history. An adverse credit history is defined as being more than 90 days late upon any debt or by any of the following:
- Default on any repayments due upon federal higher education debts
- Bankruptcy within the past five years
- In the foreclosure process or been foreclosed on within the past five years
- Tax liens within the past five years
- Wage garnishments
- Accounts listed since charge-offs/unpaid write-offs
Check back with us next week whenever we explain the steps you can take if you’ve already been denied access to a Federal Parent IN ADDITION loan!