Need a Student Loan but Lack the Credit- Use Your Parents
Eligibility and Benefits of the Parent PLUS Loan
<b>What is a Parent Plus Loan?</b>
A Parent PLUS Loan is a Federally funded student loan. Parent PLUS loans were created to allow parents to borrow money to fund their child's higher education. It is primarily for the parents of undergraduates who are their dependents.
These loans are given to parents with good credit histories. The interest rates are fixed and repayment begins after the 2nd disbursement.
<b>Eligibility and Requirements</b>
-Good Credit: Parents taking out this loan must have good credit.
-Half-Time Enrollment: You are required to be enrolled in an approved college or university no less than half time. "Half-time" usually means you are taking six or more credit hours per semester.
-FAFSA: Typically, you are required to complete the Free Application for Federal Student Aid. Most schools will require this but some will not. Check with your school's financial aid office to see if yours does.
-US citizen: You must either be a US citizen or permanent resident. You can also be from American Samoa or Swain's Island.
<b>What's so Good About a Parent PLUS Loan?:</b>
-The greatest benefit of the Parent PLUS loan is that parents can borrow money to help pay for their child's education.
-These loans have have a maximum interest rate that is set by the Federal Government. The current interest rate (as of July 1, 2006) is 8.5%.
-Private Lenders offer incentives such as interest reduction and cash rebates.
-It's not based on income but on credit history. You can't be turned down for making too much money.
-You can borrow funds to cover such things as tuition, housing, meals, books and supplies.
-Interest could be tax deductible.
<b>Exactly How Big can my Loan Be?</b>
The amount of money you can borrow depends on what it costs you to go to school and how much other financial aid you are receiving. For instance, if you will be paying $8,000 a year to attend school and you have been given $2,000 in other kinds of financial aid, the most your parents can borrow is $6,000.
The money is given directly to your school. It's disbursed in no less than two installments and used to pay for tuition, fees, and housing. If there is any money left over mailed to your parents to be used for your other educational needs.
<b>Repaying Your Parent PLUS Loan: </b>
These loans must be repaid in less than 10 years. If you must extend your repayment terms, consolidation is your only option.
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About the Author
To learn more about other low interest loans please visit our Low Interest Student Loans page. A college student herself, Elise Fisher enjoys writing articles to help college students learn more About-Student-Loans.com
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