PLUS Loans? it’s never too late to subsidize your son or daughter? s education cost
PLUS Loans? it’s never too late to subsidize your son or daughter? s education cost Rising. Soaring. Skyrocketing. These are what that appear to begin every article about college tuition costs? and they are words guaranteed to create every parent cringe. Based on the College Board, costs for the 2004-2005 school year at four-year private colleges are up 6%, while costs at four-year public colleges are up 10. 5%. Scary? Yes. Impossible to take care of? No! The good thing is that there’s more grants for single mothers available than ever before. One of the more interesting grants for single mothers options is the Parent Loan for Undergraduate Students, or PLUS Loan. What is a PLUS Loan? PLUS Loans are federal loans taken out by parents to help pay their children? s college costs. PLUS Loans offer several advantages: Interest levels are adjusted each year, but are consistently kept low. For the 2004-2005 school year, the interest rate is 4. 17%. It is capped never to exceed 9%. Financial need is not a determining factor in finding a PLUS Loan. No collateral is needed. There is no penalty for early repayment. Loans may be consolidated. If you are eligible, up to $2000 in interest may be tax-deductible beneath the Hope Education Tax Credit. Who’s qualified to receive an advantage Loan? If you are a parent with dependent students attending college at least part-time, you are eligible to get a PLUS Loan. You do have to have a good credit score. The following credit issues will reduce your chances of obtaining a PLUS Loan: Bankruptcies Defaulted loans Payments overdue by ninety days or maybe more High debt-to-income ratio If you are refused for a PLUS Loan as a result of poor credit history, you’ll find anyone to co-sign the loan with you and apply again. Just how much may i borrow with a PLUS Loan? It is possible to borrow around the total cost of undergraduate education expenses, minus other grants for single mothers already received. Expenses may include tuition, room and board, supplies, lab expenses, and travel. How do i make application for a PLUS Loan? It is possible to make application for a PLUS Loan through the Federal Family Education Loan (FFEL) Program or through the William D. Ford Federal Direct Loan (Direct Loan) Program. FFEL loans originate from private lenders or loan servicers, such as your bank. PLUS Applications are available from your school or your lender. To apply for an FFEL PLUS Loan, you complete the application and submit it to your school. The institution completes its percentage of the application and sends it to the lender for approval. Direct loans originate from the U. S. Department of Education? s Direct Loan Servicing Center. To make application for a Direct PLUS Loan, you complete an immediate PLUS Application for the loan and promissory note and submit it to your school? s grants for single mothers office. This form is available from your school? s grants for single mothers Office. It is possible to remove one loan per enrollment period for each eligible student in your family. PLUS Loans do require an application fee of up 4% of the principal of the loan. These fees are deducted from the loan principal, so no up-front money is needed. The fee carries a 3% origination fee charged by the government and a guarantee fee as high as 1% charged by the guarantee agency. However, most guarantors waive the guarantee fee. How are PLUS Loan funds disbursed? Funds are sent straight to the institution? s grants for single mothers office for scheduled payments over the course of the academic year. As with other federal loans, there are usually at least two disbursements, one for each school term. The funds are first applied to tuition, fees, room and board, and other school charges. If anything remains, you can receive it as a always check or you can put it in your student? s school account. This remaining money can be used for education expenses. When do i repay PLUS Loans? You start trying to repay PLUS Loans 60 days after the final disbursement of the school year. So, if the last disbursement is made in January, as is typical, repayment generally begins in late February or early March. PLUS Loans will be the financial responsibility of the parents, not the student. If the student agrees to create payments on the PLUS Loan but fails to make the payments promptly, the parents are held responsible. What exactly is the big difference between PLUS Loans and other figuratively speaking? The other student loan generally open to students is the Stafford Loan. The dining table below illustrates the similarities and differences between those two loan programs: PLUS Loan Federally guaranteed Made to parents of dependent students Interest is low, however, not as little as a Stafford (currently 4. 17%) Repayment begins 60 days after final disbursement for the academic year Loan borrowing can depend on 100% of college education costs Stafford Loan Federally guaranteed Made to students themselves Interest is lowest available (currently 3. 37% Repayment begins 6 months after graduation or leaving school Loan borrowing is capped: $2, 625 for first-year undergraduates $3, 500 for second-year undergraduates $5, 500 for third- and fourth-year undergraduates Loan may be needs-based and takes a FAFSA Interest charges do not begin until repayment begins, after graduation This article is distributed by NextStudent. At NextStudent, we believe that getting an education is the better investment you possibly can make, and we’re dedicated to assisting you to pursue your education dreams by making college funding as easy as possible. We invite you for more information about PLUS Loans at http: //www. NextStudent. com.