PLUS Loans

Federal Parent PLUS Loans are student loans which are offered to parents, or legal guardians, of students who are studying at least half time in the United States. The amount a parent can claim for with PLUS loans will be enough to cover a student’s tuition, textbook, boarding, and other school expenses for the year; however the loan will take into account the amount that the student will receive in financial aid and deduct that from the final total.

PLUS Loans For Parents

Many parents find that PLUS loans are the best way to help finance the education of their children. These loans are taken out in the parents name and are therefore their responsibility, not their child’s. PLUS loans can be claimed for the entire annual amount required for a student to study, minus the amount of any other financial aid which the student receives.

PLUS loans are available to parents through the U.S. Department of Education with a capped interest rate of 7.9%. They are only available for a year’s education at a time, so if a student is studying a course for 4 years, then an application will need to be made for every year of study. In cases like this the PLUS loans can be consolidated into one loan with one standard payment after the student has graduated.

Repaying PLUS Loans

The repayment of PLUS loans can be done while the student is still in education or can be deferred until they graduate. The typical plan for repayments allows the parents to pay the PLUS loan back at a fixed monthly amount, although another common PLUS loans repayment plan is a graduated program, which means that the repayments start small and get bigger over time.

The repayment of PLUS loans can also be based on the borrower’s income or through an extended repayment program. Also in cases of financial hardship it is possible for PLUS loans to be deferred, either through making smaller payments or lengthening the repayment schedule. Typically PLUS loans are repaid over a period of 10 to 25 years.