Parent Plus Loans

2007-09-25 14:12:16

( Family )



The federally sponsored program, parent plus Loans suits you if you are citizen of the United States or holds permanent residency status. You must also have a good credit history and must meet the basic requirements for what the loan stands for, that is to use the parent plus loans to pay for your undergraduate dependent’s education in an approved college or university.

You can choose to apply for the FFEL program, an acronym for the Federal Family Education Loan or the Direct Loan program, also known as the William D. Ford Federal Direct Loan. Both are administered by the United States Department of Education with similar eligibility rules and loan amounts. The difference lies in repayment terms and source of funds. Generally, FFEL derives funds from private lenders while Direct Loan comes from federal government.

You can file application for either of the two programs but not both for your dependent during the same enrollment period. If you have another undergraduate dependent however, you can apply for the other unused program.

A parent plus loan application is processed after fulfillment of requirements. A direct plus loan requires a complete loan application and a promissory note you can avail from your school’s financial aid office. A FFEL plus loan requires a complete loan application too. After your school fills out its portion of the application, it will be forwarded to a lender for evaluation.

To obtain the maximum amount of financial aid you are eligible to, your dependents are encouraged to file a FAFSA or the Free Application for Federal Student Aid to the United States Department of Education. This additional application determines eligibility for federal financial assistance as well as other opportunities like scholarships and grants. Your yearly borrowing limit on parent plus loans is equal to your cost the cost of attendance or the amount it will cost your dependent to go to school minus any other financial aid you receive. As of July 1, 2006, the interest rate of the loan is fixed at 8.5 percent.


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