LOAN RATE: Plus Loan With And A Fixed Cost

2007-03-08 10:33:40

( Financial )



Plus loans, short for Parent Loan for Undergraduate Students, are federally sponsored financial assistance with a low loan rate. Parents can acquire a plus loan to finance the entire cost of an undergraduate child’s education. The loan limit for plus loans can cover tuition fees, room and board, books and supplies, laboratory and travel expenses minus any other financial aid received.

Since these are not need-based loans, plus loans are like private loans with a much lower loan rate. Parents can apply for a plus loan as long as they have a good credit standing and without any adverse credit history.

As of July 1, 2006, plus loan rate is fixed at 8.5%. Repayment for plus loans begins 60 days after the full reimbursement of the loan. There is no grace period for plus loans and interest rates begin to accumulate right after the first disbursement. Hence, your parents are repaying both the principal and the interest while you’re still in school.

Aside from the interest rates, parents are charged additional fees of up to 4% of the loan amount. This amount is deducted proportionately after each loan disbursement.

In case your parents cannot meet the repayment schedule, forbearance or deferment of the loan is possible provided that the account is not in default. Loan forbearance or deferment allows for postponed or reduced payments.

Since a plus loan is unsubsidized however, interest will be charged during forbearance or deferment periods. If the interest charges are not paid, they will be capitalized and added to the principal amount of the loan. This means that additional interest will be charged based on the higher amount.

On the other hand, a plus loan can also be canceled under certain conditions such as if the school you are enrolled in closed. Failure to complete your program, or not liking your school or program of study, and failure to obtain employment after finishing your program are not valid reasons to cancel the loan however.


All rights Reserved © Tradenet Services srl
Do not duplicate or redistribute in any form.