PLUS loans are government issued loans for parents whose students do not receive enough other aid to pay their educational expenses. Due to LLCC's affordability, usually fewer than 10 LLCC parents request PLUS loans each year. Most PLUS
loans are made to parents whose students come from outside Springfield and must find housing in Springfield. The first step for a PLUS loan is for students and parents to complete the Free Application for Federal Student Aid (FAFSA). This application is required for all government grants, government-issued Direct Student Loans and Federal Work-Study. Students completing the FAFSA will be awarded all of the grants to which they are
entitled and awarded a student loan and work-study upon request and eligibility. Parents must be credit worthy to be eligible for a PLUS loan. Any potential financial assistance for which a student is eligible will be counted against a parent's PLUS loan eligibility. If a parent has the need for the Parent PLUS loan, complete the steps below: * PLUS loans are also available to students who have already earned a four-year degree. If given an option in completing the online process, always choose the parent option.Parent PLUS Loan
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A Direct PLUS Loan is a federal student loan for parents and grad students
Updated
2022-05-19T13:47:45Z
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while you're on the go. Direct PLUS Loan stands for Parent Loan for Undergraduate Students. However, don't let the name confuse you, as graduate and professional students can take out a loan as well as
parents. You can get a Direct PLUS Loan to pay for expenses not covered by other financial aid offered by your school or your child's school. The US Department of Education is your lender, and you can't have a poor credit history to take out a Direct PLUS Loan. The maximum loan amount you can receive is determined by the cost of attendance minus any other financial aid you or your child receive. You'll pay a fixed interest rate over the life of the loan, which has a term
length of up to 30 years. You'll make payments either monthly or quarterly, and the first payment is often due 60 days after the final payment is disbursed.
The rate for the 2022-23 school year is set at 7.54%. The loan is unsubsidized, meaning interest will accrue while you or your child are in school. Interest payments on federal student loans are currently suspended through August 31, 2022, due to the coronavirus pandemic.
You'll also pay an origination fee of 4.228%, which will be deducted from the loan disbursement. There are no prepayment penalties with a Direct PLUS Loan, so you can pay it off early without facing a fee.
Unfortunately, you can't get a Direct PLUS Loan as an undergraduate student — your parents will need to take it out for you. If you're a graduate or a professional student, you can get a Direct PLUS Loan.
A Direct PLUS Loan is commonly known as a Parent PLUS loan when made to a parent, and as a grad PLUS loan when made to a graduate or professional student.
How to apply for a Direct PLUS Loan
Schools will generally require you to apply for a Direct PLUS Loan online, though some schools have different application processes. You'll need the following information to apply:
- Verified Federal Student Aid ID
- School name
- Student's name, social security number, date of birth, address, and phone number
- Parent's address, telephone number, and email (if you are a parent)
- Employer's name, address, and phone number
The application will take about 20 minutes to complete and must be done in a single session.
Pros and cons of a Direct PLUS Loan
Alternatives to a Direct PLUS Loan
Before considering a Direct PLUS Loan, you should see what other financial aid your or your child's school offers, such as grants, scholarships, work-study, direct subsidized and unsubsidized loans. You'll often get this aid for free or at a lower cost than with a Direct PLUS Loan, so make sure you fully look over the financial aid package before taking out this loan.
Private student loans may also be an option for parents, as they allow you to help pay for your kid's college without holding you solely responsible for their debt. Private student loans often require a parent to be a co-signer and may offer lower interest rates if you have excellent credit. But private loans are often worse options than PLUS loans because they tend to charge high rates if you have less-than-excellent credit.
While Direct PLUS Loans can be a good option to bridge the gap between what you can afford and what you need, make sure you understand what you're getting into before signing on the dotted line for you or your child.
Ryan Wangman is a reporter at Personal Finance Insider reporting on personal loans, student loans, student loan refinancing, debt consolidation, auto loans, RV loans, and boat loans. He is also a Certified Educator in Personal Finance (CEPF). In his past experience writing about personal finance, he has written about credit scores, financial literacy, and homeownership. He graduated from Northwestern University and has previously written for The Boston Globe. Learn more about how Personal Finance Insider chooses, rates, and covers financial products and services here >>
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