PLUS Loan

A PLUS Loan is a student loan offered to parents of students enrolled at least half time in eligible programs at participating and eligible post-secondary institutions. As of July 1, 2006 PLUS Loans are also available to graduate and professional students at participating and eligible postsecondary institutions. PLUS loans are similar and different from Perkins and Stafford loans in various respects:

imilarities with Stafford and Perkins loans

* Offered under Title IV of the Higher Education Act of 1965 (with subsequent amendments), and are therefore backed by the full faith of the United States Government
* Available both through the Federal Direct Student Loan Program (FDSLP, also known as Direct) or from a private lender through the Federal Family Education Loan Program (FFELP)
* Can be consolidated through the College Consolidation Loan program

Differences from Stafford and Perkins loans

* Become due for repayment immediately (Ended as of July 1, 2008), and there is only interest rate term
* When taken by a parent, becomes a commitment by the parent, rather than the student
* Are subject to higher interest rates (i.e., 7.9% in Direct and 8.5% in FFELP)
* Can be incurred in amounts that cover up the entire cost of education (including living expenses), less other financial aid
* Offer different repayment plans, though there is no interest rate or accrual relief involved in any of the plans
* Eligibility is based on the parents or graduate students in question not having an adverse credit history

Changes as of July 1, 2006

Like the Stafford loan program, the PLUS program changed to a higher, but fixed rate, structure for loans disbursed after midnight, July 1, 2006. The rate offered through the Direct Loan Program will be 7.9%, while the FFELP will be 8.5% — although price competition may result in lower rates and incentives in the FFELP.

Additionally, the PLUS program is now available for graduate and professional students to borrow to finance their own educations. The program is expanding away from a parent-only program to include graduate school students. The new option is commonly referred to as the Grad PLUS loan.

Amendments were made to the PLUS Master Promissory Note in an addendum to accommodate the changes in eligibility as well as the new fixed rate structure.

Changes as of July 1, 2008

For PLUS loans made to parents that are first disbursed on or after July 1, 2008, the borrower has the option of beginning repayment on the PLUS loan either 60 days after the loan is fully disbursed or wait until six months after the dependent student on whose behalf the parent borrowed ceases to be enrolled on at least a half-time basis.

PLUS loan lenders

Top PLUS (Parent) lenders ranked by total FY 2006 loan originations SOURCE: Stafford (FFEL & Direct) and PLUS (FFEL & Direct) Loans, from the National Student Loan Data System (NSLDS), US Department of Education, Fiscal Year 2006. [http://www.student-marketmeasure.com/facts.cfm]

Top Grad PLUS lenders ranked by total FY 2006 loan originations SOURCE: Stafford (FFEL & Direct) and PLUS (FFEL & Direct) Loans, from the National Student Loan Data System (NSLDS), US Department of Education, Fiscal Year 2006. [http://www.student-marketmeasure.com/facts.cfm]

External links

* [http://studentaid.ed.gov/PORTALSWebApp/students/english/parentloans.jsp U.S. Dept. of Education: PLUS Loans (Parent Loans)]
* [http://studentaid.ed.gov/PORTALSWebApp/students/english/PlusLoansGradProfstudents.jsp U.S. Dept. of Education: PLUS Loans for Graduate or Professional Students]


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