Fund Your Schooling With PLUS Loans
The U.S. Department of Education runs another loan program designed for parents of university students to financially assist their children. The PLUS loan (parental loan for Undergraduate Students) program is also intended for independent graduate or professional students. Beginning in July of 2010 all PLUS loan funding comes from the U.S. Federal Government under the Direct Loan program. Prior to this date funding was under the Federal Family Education Loan (FFEL) program and came from private lenders.
What Is a PLUS Loan?
Parents of undergraduate students (and graduate or professional students) can receive up to the total cost of their education minus any other financial aid (grants or scholarships) that they benefit from. The PLUS loan is not income dependent but applicants will have to pass a moderate credit check. They can pass so long as they do not have an adverse credit rating, or failing that if they can prove extenuating circumstances or obtain a co-signer they will be accepted for a PLUS loan. Interest rates are fixed at 7.9% and both the student and the parents must fill out a FAFSA form to apply. Parent borrowers must also fill out a Direct PLUS Loan application and a Master Promissory Note (MPN). An MPN is a legal document that requires the parent to repay the loan. These forms are available at your school's financial aid department and in some cases online.
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