Use Your Parents Instead of Collateral to get a Student Loan

Federal Parent PLUS Loans Can Solve Bad or No Credit Dilemma for Undergraduates

<b>About the Loan:</b>

The Parent PLUS Loan is a student loan that is sponsored by the federal government. Parent PLUS Loans enable parents to borrow money to pay the education expenses of their child who is a dependent undergraduate student.

These loans are given to parents with good credit histories. Interest rates are fixed and you don't have to repay it until after the second disbursement.

<b>What are the Requirements?:</b>

-Good Credit: As we have said before, this loan is based on the credit of the parents.

-Half-Time Enrollment: You are required to be attending a college or university no less than half time. "Half-time" usually means you are enrolled in six or more credit hours per semester.

-Submit a FAFSA: Normally, you are required to complete the Free Application for Federal Student Aid. Most schools will require this but some will not. You can ask your school's financial aid office if they require a FAFSA for Parent PLUS loans.

-US citizen: You must be a US citizen, permanent resident, or citizen of American Samoa or Swain's Island.

<b>What's so Good About a Parent PLUS Loan?:</b>

-The best benefit is that parents are able to borrow money to help pay for their child's education.

-These loans have federally guaranteed low interest. The current interest rate (as of July 1, 2006) is 8.5%.

-Private Lenders offer incentives such as interest reduction and cash rebates.

-Whether or not you receive a loan is based on credit history. This means you won't be turned down because your income is too high.

-You can borrow funds to cover such things as tuition, housing, meals, books and supplies.

-Interest may be tax deductible.

<b>How Much Can I Borrow?:</b>

You can borrow the amount of your educational costs minus any other financial aid. For example, if it costs you $8,000 a year to attend school and you have $2,000 in financial aid, your parents can borrow up to $6,000.

The money is given directly to your school. It is then disbursed in no less than two installments and used for tuition, fees, and room and board. If there is any money left over sent to your parents to be used for your other educational needs.

<b>Repaying Your Parent PLUS Loan: </b>

These loans must be repaid in under 10 years. If you must extend your repayment terms, consolidation is your only option.

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