DIRECT PLUS LOAN: Quick Loan with Higher Credit

2007-03-08 10:33:40

( Financial )



Direct plus loans are mortgages that allow for greater borrowing limit than other federal loans. Under this type of loan a parent can apply for the full amount of expenditures to be incurred for a child’s college education inclusive of school fees as well as room and board after deducting the amount acquired from other financial aids.

A direct plus loan has low interest rates that change annually, and you need to apply for the loan every year. However, application for this type of loan cannot be simultaneous with an FFEL plus loan although a parent can simultaneously apply for a direct plus loan and an FFEL plus loan for two different children.

Direct plus loan requires no collateral, has no early repayment penalties, and the loan account is primarily in the child’s name although the promissory notes are co-signed by a parent. It is however an unsubsidized loan such that the interest charges begin the moment the first monetary disbursement has been released.

While any parent is qualified to apply for a direct plus loan, direct lenders employ a credit history evaluation prior to your loan approval. Hence, the approval for a direct plus loan depends mostly on your reliability as a payer. To be evaluated as having a worthy credit record, you must have no delinquent financial account for the past ninety days or so. You also must have no record of property foreclosure or repossession, tax liens, default, discharge, or wage garnishment in the past five years.

Direct plus loans are also easy to consolidate. Direct loan consolidation will buy you more time by means of a longer repayment period. It can also lower the interest charges that you will pay for your loans since the weighted average of the interest rates of your consolidated loans will be the interest rate applied to the new loan that will be issued to you once you decide to go for direct loan consolidation. Remember only that once you consolidate your loans, there is no turning back as consolidated loans can never be unconsolidated again.


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