Plus Loans

Paying for college is a huge undertaking, and it is understandable that parents want to provide whatever assistance they can for their children as they embark on a college education. For parents of dependent students, there is the option of borrowing a Parent Loan for Undergraduate Students, or PLUS loan. PLUS loans can be applied to tuition, materials, and any other college-related expenses for the borrower's college-bound children.

Available to grandparents, stepparents, and legal guardians as well as parents, PLUS loans can help finance a college education when scholarships, grants, and other loan options have already been exhausted. Offered through the U.S. Department of Education under the Direct Loan Program, parents are expected to repay loans under different conditions than student borrowers. Parents must begin repaying PLUS loans after 60 days of the final disbursement. Parents can defer on PLUS loans if their child is enrolled less than part time, or for an additional six months after the student ceases to be enrolled either full time or part time.

Unlike the Stafford and Perkins loan options, PLUS loans are not based on need. Other components of the PLUS loan are low interest rates and flexible payment plans. The current interest rate is fixed at 7.9%, while forbearance and deferment can be options during times of extreme financial hardship. Because of the lower interest rates, PLUS loans can be advantageous in allowing legal guardians to make repayments without incurring the high interest rates involved in taking out second mortgages or getting a home equity loan. Both parents and students must be U.S. citizens to be eligible for PLUS loans, and the parent must have good credit in order to borrow. If not, an endorser or co-signer will be required.

For those who wish to continue beyond undergraduate studies, there are also Graduate PLUS loans, which are available to cover the entire cost of college but are provided directly to graduate students without the necessity of a guardian or cosigner in most instances. Again, there is no requirement of financial hardship or need, and interest rates depend upon the applicant's credit history.

Paying for school is not easy, but we are here to help. OEDb's student finance section will help you find the money you need to pay your tuition and other college expenses. We cover scholarships, college grants, and student loans. Scholarships and grants are both forms of "free money", meaning they don't need to be paid back. Scholarships are typically awarded by businesses or individuals, with the money being earmarked specifically for tuition. They can be awarded based on a student's location or by religious affiliation, such as Catholicism or Islam. Grants are typically awarded by governments or non-profit organizations and the money often can be applied to several different expenses a student may incur, not solely tuition. They can be awarded based on location or ethnicity, for instance African American or Hispanic. Loans are not considered "free money", because unlike scholarships and grants, they do need to be paid back after graduation. Common federal loans include Perkins and Stafford. Loans are also available by location.