PARENT PLUS LOAN APPLICATION: A Good Credit History Is All It Takes

2007-03-08 10:33:40

( Family )



Perhaps, the most important thing in parent plus loan application is simply a good credit history. It is of course important for you to be a US citizen and have an undergraduate child that is dependent on you for you to qualify for the loan.

With parent plus loan, a parent can borrow the full amount a child’s education including tuition fees, supplies, room and board, as well as travel expenses minus the amount received from any other financial aid.

Parent plus loan application normally entails a modest credit check to determine if you have an adverse credit history. An adverse credit history is defined as being more than 90 days late on any debt repayment within the past five years. Those with Title IV debt and debt due to grant overpayment subjected to default determination, foreclosure, repossession, tax lien, bankruptcy discharge, wage garnishment, or write-off are also considered as having adverse credit history.

Parent plus loans are federally guaranteed loans. Hence, parent plus loan application requires no collateral. Since it is a federal loan, a FAFSA may be required and it is advisable to check with your school’s financial aid office concerning your FAFSA certification.

Parent plus loan application requires fees of up to 4 % of the principal amount which is deducted proportionately for every disbursement. 3% of the required fees go to the federal government as origination fee while the remaining 1% serves as guarantee fee. The guarantee fee however is waived by most guarantors.

Unsubsidized loans like parent plus are not need-based. Thus, interest for such loans is charged right after the first disbursement. And interest rate is fixed at 8.5%.

On the whole, parent plus loan is the next best thing should federally subsidized aids prove insufficient for a child’s education. Its fixed and low interest rate makes it more advisable before you consider obtaining a private loan.


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