(LoanSafe Warning) Before you think about getting student loans, it's generally advised to try and get grants, gifts, or other sources of free funds for college payments. But if you strike out in those other arenas, and you can afford it, it is generally wise to go through federal student loans, although there are alternatives to achieving them.
Before you do anything, first you should look into the costs of colleges of all the colleges around you and compare costs. Community colleges are generally cheaper to start out at, and California has some of the cheapest community colleges in the country.
If you get denied for federal student funding for grants or other free sources of money, there are currently low-interest federal loans for students and parents who need a more flexible payment option. But do all of your research early, in today's slowing economy you never want to miss a deadline, when applying for loans, and especially when you get the loan.
PLUS Students Loans
Get started with applying for FASFA. Applications are generally free, and you can apply online, or get a form from a schools campus.
Home - FAFSA on the Web-Federal Student Aid
If you are inquiring about your FAFSA, you must contact the Department of Education at 1-800-4-FED-AID
The Federal Plus Loan is a student loan for parents who have dependents who are going to college. PLUS Student loans are meant to cover costs that are not already covered by a financial assistance program. Your parents only have to apply for this program for you if you are an undergrad. Graduates are eligible to apply for the PLUS Loan Program. PLUS loans are a fixed rate loan at a fixed rate of 7.9%. A 4% origination fee is charged, and added to the total loan repayment amount. This amount is not required upon signing the MPN.
If a parent qualifies under the Service Members Civil Relief Act, the interest rate on loans obtained before entering military service may be capped at 6% during the parent's military service. Parents must contact their loan servicer to request this benefit.
The eligibility requirements for parents to get PLUS Loans are:
- The borrowing parent must be the biological or legally adoptive parent
- The student must be dependent and must be enrolled in school at least half time
- the school must have the Direct Loan Program
- credit history of the parent must be passable
- The student and parent must be US citizens or eligible non-citizens
- Both the parent and student can't be in default in any other federal education loans
to apply for this loan: https://secure.studentloannetwork.com/apply/parentplus/
Unlike several other types of federal student loans such as the Stafford and Perkins Loans, the PLUS loan does require a credit check, but like most loans, a co-signer with a good credit check may also apply with you on the loan to qualify for it. The danger to this is if you or your parents default on the loan, the co-signer will hold equal responsibility to pay back the loan. For this reason, picking a co-signer is always a tricky business which requires a careful picking and a long conversation before an agreement is made.
PLUS loans are meant to supplement for what you can't get with another loan program to pay for an entire college experience. For example if your child's year of college costs $10,000, but you got another loan (or any other financial aid) somewhere else for $6,000 somewhere else, you subtract that financial aid from the total amount.
Example of PLUS Loan, loan limit: total college cost - aid already received = PLUS Loan limit
Repayment options for PLUS Loans
- PLUS loans can be paid off up to 10 years
- Payment plans are usually at least $50 a Month
- Repayment of principal and interest begins 60 days after the loan is fully disbursed
- Parents have the choice to allow the interest build up until their child leaves school (but interest that is built from the date of disbursement is added onto the outstanding loan balance
- PLUS Loans can be consolidated (can lower your monthly payments and lock in lower interest rates)
- Graduate students can postpone their loan payments as long as they are still in school at least half time
Generally after the loan is fully dispersed, the first payment is due 60 days after the final payment. This is so only if the student is not enrolled at least half time, but even then parents are allowed six months after their child stops going to school half time to begin repayment. Repayments are made to a servicer who is listed on the disclosure statement. Loan servicers have to provide constant and up-to-date status's on the loan. Parents can follow the link below to retrieve their loan information.
National Student Loan Data System for Students
Unlike other federal student loans, students are NOT allowed the right to pay back this loan. Parents are under the full and un-negotiable responsibility to repay PLUS student loans, which they receive for their kids.
Rules of PLUS Loans
- Loans are typically given in two installments
- the money must first be used to pay your child's tuition and fees
- any remaining money is disbursed to the parent; parents must make a authorization if they want the money going to their child's account
- Schools must notify parents when funds are credited (This notification must be sent to you no earlier than 30 days before and no later than 30 days after the school credits your account)
- Lenders send funds directly to the school
How to cancel the loan
You can cancel a portion of your loan from being credit. You must give a 14 day notice after the date that your school sends you the notice 30 days before the funds are credited to your account.
How to get the loan
For a Direct PLUS Loan, the parent must complete a Direct PLUS Loan Application and Master Promissory Note (MPN). The MPN is the legal contract where the borrower signs to repay the loan along with built up interest and any fees. The terms and conditions of the loan are also explained in this legal document. Even if a parent signed a MPN for a FFEL (these are private PLUS Loans), they must produce another one for a Direct Plus Loan (the federal loan). for online PLUS Loan Application and/or MPN application go to this linkhttps://studentloans.gov/myDirectLoan/index.action
PLUS Loans are generally paid in two installments, but none of the installments will be more then half the loan amount. Loan money must first be used to pay for the students tuition, fees, room and board and other school charges. Any remaining funds will be issued to the parents in the form of a check, unless it is authorized by the parents first to send the funds to the student.