PLUS Loans

A PLUS loan or Parent Loan for Undergraduate Students is an excellent student loan option for not only parents but also grandparents wanting to help pay for their child or grandchild's college expenses. This is a federal loan offering the borrower a low interest loan with flexible repayment options. The Plus loan is an excellent way to borrow money toward your child or children's University or college expenses and costs such as books, meals, housing and tuition, so funding does not become a large problem. 'PLUS' loans are available to legal guardians, biological parents, grandparents and adoptive parents as long as the college student remains a dependent. They never base a PLUS loan on the financial needs of a parent or student unlike Perkins, Stafford and many other type loans.

Although any parents or grandparents can apply for a Plus Loan, they do require a good credit rating. They cannot turn parents down for a PLUS loan based on their income because it has nothing to do with the parent's income or financial needs. Repayment of PLUS loans start from two to three months after receiving the loan and there are fees and charges associated with missed or late payments, which is the same as any normal loan. To apply for a PLUS loan, both students and their parents have to complete the FAFSA or Free Application for Federal Student Aid forms. Once the student and parents submit the Free Application for Federal Student Aid and the government reviews it, the parents will get a Student Aid Report. This is the report required to apply for a PLUS loan.

Many parents in the past would use home equity loans, other investments or even second mortgages to help cover the expenses of college or university. Most financial advisors will tell you that the advantages to getting a PLUS loan is that the loan keeps parents from having to refinance their home or take out high-interest loans to pay for college. They design PLUS loans specifically for parents helping with their sons or daughters college expenses. Parents getting this loan not have to refinance and can keep saving their investments for other needs. Unlike typical loans, there is no collateral required for a PLUS loan. One of the features of a PLUS loan is that even if the student's parents paid the education expenses and tuition for their child, they can still get a PLUS loan. For further information on PLUS loans there are a few very good sites that include the Federal Student Aid website and SallieMae.com.

A Grad PLUS loan is a federal student loan available for students wanting to continue their education, pursue graduate studies and fund their education. Students can finance their complete graduate work costs less federal aid and use the loan for associated expenses such as books, supplies and other materials. Just like the PLUS loans and the Grad PLUS loans, the federal government sets the maximum interest rates on these. Students can choose to postpone repayment of their Grad PLUS loan until after graduation. Federal loan consolidation may be available for Grad PLUS and PLUS loan borrowers.

Resources:

• Federal Student Aid
• SallieMae.com