With the cost of college continuously on the rise, not having enough money to cover the entire cost of attendance is also going up. Whether you’re a parent, an undergraduate student or at the graduate or professional level, you may need to tap into other resources, including a direct PLUS loan.
What Is a PLUS Loan?
A PLUS loan is available to graduate or professional students and parents of dependent undergraduate students. Undergraduates can take advantage of both subsidized and unsubsidized federal student loans, as well as parent PLUS loans.
PLUS loans are available for parents to take out on their student’s behalf or for graduate and professional students to continue their education. These loans cover any financial gaps left by other types of financial aid, including grants, scholarships and other federal student loans.
Types of PLUS Loans
- Direct PLUS, also known as grad PLUS. These loans are available to graduate or professional students who are enrolled at least part-time, are eligible for federal student aid and who don’t have major credit history problems, including recent delinquencies of 90 days or more.
- Parent PLUS. These loans are for parents to borrow and pay for school on behalf of their college student. Parents take out this loan and parents-not students-are required to pay it back. Parent PLUS loans also have credit requirements.
PLUS Loan Costs
The interest rates for PLUS loans are higher compared to subsidized and unsubsidized loans. Interest rates are the same for both grad and parent PLUS loans regardless of credit history, even though a bad credit score might prevent you from qualifying for a loan. Interest rates on loans disbursed after ) are set at 5.30%, or about 2 ? percentage points higher than the interest rate on a direct subsidized loan. PLUS loan interest rates are fixed, meaning that once the loan is disbursed, the interest rate doesn’t change for the life of the loan unless you consolidate or refinance your loans. (more…)