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What is a PLUS Loan?
The Federal Parent Loan for Undergraduate Students (PLUS), also called the parent loan, is a federally sponsored loan for parents of students attending college and is available at schools participating in the FFELP. A bank, credit
union, savings and loan association or in rare cases, the school itself can actually make the loan.
A guarantor, a state agency or non-profit corporation, insures the loan, which means you can make the loan just on your signature. The guarantor may charge a fee for this insurance.
This loan was created specifically for parents of students after high school and has many benefits not ordinarily found in credit cards or other loan products. PLUS loans offer an alternative for parents whose financial resources are
insufficient to cover anticipated education costs. The PLUS loan permits parents to borrow up to the cost of education each year for each dependent student in college less any other financial aid the student may receive.
Parent, you choose the lender. Keep in mind that this is the beginning of a long-term relationship. It is a good idea to use the same lender throughout your student's college career.
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Do I qualify for a PLUS Loan?
Please note that financial need and family income are not considered for acceptance for this loan. As a result, many parents who may not be eligible for other federal loans can typically qualify for a PLUS loan. The lender is, however,
required to review your credit history before approving the loan. To find out if you qualify, fill out our PLUS pre-approval form.
Your student should apply for a Stafford Loan first, since the amount of your PLUS loan could reduce the amount he or she can borrow under the Stafford Loan Program. The terms on a Stafford Loan are better than the PLUS Loan and only
in the student's name.
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How much can I borrow?
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What are the terms?
- The interest rate of a Federal PLUS loan cannot exceed 9%.
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The interest rate varies annually and is adjusted each July 1.You'll be notified of interest rate changes throughout the life of your loan.
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You may be required to pay an origination fee of up to 3% of the principal balance. This will be deducted from the loan disbursement you receive.
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Repayment begins within 60 days after the loan is fully disbursed.
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Your accrued interest will be capitalized (or added to the principal balance) when you begin repayment.
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You may have up to ten years to repay.
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The minimum payment amount is $50 per loan.
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Many lenders offer up-front discounts or repayment incentives that affect the over-all cost of the loan. You should examine these options carefully when choosing a lender. You may get more money up-front, but actually pay more in
the long-term.
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How do I apply?
Complete the Free Application for Federal Student Aid (FAFSA) and the PLUS Loan Application as in the application process at your school. Your school may also have an institutional
application you must complete. You will receive a Promissory Note that you must sign and return as instructed.
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How do I Receive my money?
Normally, loans are disbursed in two equal disbursements, at the beginning and middle of the academic period. Schools disburse PLUS loan proceeds in one of two ways:
- Electronic funds transfer (EFT), which allows your lender to transfer your money directly to a school's bank account and subsequently to your student account
- Paper check made payable to you and your student's school and sent directly to the school for endorsement.
To find a Brazos Lender, click here.
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