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The Graduate and Professional PLUS Student Loans

If you are a graduate or professional student in need of financing for college, the Direct PLUS loan may be right and one of the best student loans for you. To qualify for this federal student education loan, you must have already earned a Bachelor degree and be working toward an advanced degree in your chosen field. Parent student loans are also available through the Direct PLUS program if you are under the age of 25 and are dependent on your parents for more than half of your support.

Terms of the Direct PLUS Loan for Students and Parents

Unlike other forms of federal student loans, the Department of Education checks the credit history of the primary applicant for federal student loans. A good credit history is required, whether the applicant is you or one of your parents. If neither you nor your parents can pass the credit check, your federal student loans request will be denied.

How to Apply for the Direct PLUS Loan

In order to be considered for this loan type, you must first complete and submit the Free Application for Federal Student Aid (FAFSA). Before the college you plan to attend can determine your eligibility for graduate student loans, it must first determine the maximum amount you can receive with either a direct subsidized or an unsubsidized Stafford student loan. Once that step has been completed, your next steps in obtaining a Direct PLUS are to fill out the application and the Master Promissory Note . This is a promise to pay back all of your graduate school expenses, plus all interest that accrues while you are in school.

Direct PLUS Loan Limits

Under this loan for professional students, you can borrow up to the cost of attendance at the college of your choice for one school year. Prior to issuing you the Direct PLUS loan, the Department of Education will deduct the amount that is equal to all other forms of financial assistance you are eligible to receive.

Fees and Interest Rates

Before each disbursement of your Direct PLUS loan, the Department of Education will deduct four percent of the total as a processing fee. In addition, you will be charged a 7.9 percent annual percentage rate and deducts a 4.0 percent fee each time a loan disbursement is made. This is a fixed interest rate that is not subject to market variations.

Repaying Your Loan for Graduate Students

The repayment period for a Direct PLUS loan begins as soon as you receive the loan, but it can be deferred while you are attending college at least half-time. Once you graduate or drop to attendance level lower than half-time, your first payment will be due within 60 days. You may be able to extend the deferment period to six months if you received your loan after July 1, 2008.

After you begin making payments on this loan for professional students, you typically have between 10 and 25 years to repay it in full. If you do not make any payments on your Direct PLUS loan during the deferment period, the interest will be capitalized and charged to you once repayment begins.

Types of Repayment Plans

The Department of Education allows several options for the repayment of federal student loans. The standard repayment plans provides a fixed monthly payment and up to 10 years to repay your loan. The extended plan is similar, with the exception that you have up to 25 years for repayment. A graduated repayment plan starts out low and then the monthly payment increases every two years. Finally, you may be eligible for the income based repayment plan if you meet income and family size guidelines or work in the public service sector.

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Direct PLUS Loans for Parents

An Introduction to Direct PLUS Loans for Parents

Direct PLUS Loans for parents are federal student loans designed to help out parents to pay for their child’s academic expenses. In order to qualify it is important that some eligibility requirements are satisfied. To be eligible for the direct PLUS Loan, parent and student must meet certain criteria:

  • Parent must be the biological or adoptive parent of the depending student;
  • Student and parent must be a U.S. citizens or eligible non-citizens;
  • Parent need to be in good standing with previous loans;
  • The student (depending child) must meet eligibility requirements: must be dependent child under 24 years of age and not married; must be enrolled at least half-time at educational institution participating in the Direct Loan Program.

How to Apply for Direct PLUS loan

First step in the application process is completing a Direct PLUS Loan Application and Master Promissory Note by a parent. Master Promissory Note or MPN is an official document that explains terms and conditions of the loan. It is also a document in which parent (borrower) promises to pay off the loan and interest to the Department of Education. Ask your child school’s financial aid office to get information and instructions on applying for the Direct PLUS Loan.

How Does a Parent Gets the Loan and How Much Can Borrow

After accepting your application, the Department of Education will send the loan money to your child’s school. Usually, the loan will be given out in at least two payments, no more than half of the loan per installment. The school than will use the loan to pay for student’s school expenses like lectures, accommodation, book, food and other costs. Unless parent authorizes the rest amount to be transferred to student’s account, any remaining loan money will be sent to a parent as a check of other means and must be used for the child’s schooling expenses.

The yearly limit on a Direct PLUS Loan is equivalent to the student’s expenses of attendance minus any other financial support students obtains. For example, if the price of attending school is $5,000 and the student gets $2,000 in other financial aid, his or her parent will receive up to $3,000 annually.

PLUS Loan Interest Rate

This loan has fixed interest rate at 7.9% which bring it to somewhat higher rate than rates of other federal loans provided. Parents who are military members qualify for the lower interest rate of 6%. They need to contact their loan servicer to acquire that benefit.

The PLUS Loan Repayment

The repayment period begins after the Direct PLUS Loan is fully paid off. The first payment is due in sixty days after the final disbursement.

Tailored to meet the diverse needs of the borrowers, the Direct PLUS Loan Plan for parents offers three repayment options: standard, extended and graduated.  In most cases, you will have from 10 to 25 years to repay the loan, depending on which repayment program you decide to take.

  – Standard Repayment Plan

Under this repayment plan you’re going to pay monthly fixed amounts until your PLUS loan isn’t fully repaid. Under standard plan monthly payments can be higher than under repayment options, since your loan will be paid off in shorter period of time.

  – Extended Repayment Plan

With Extended Repayment Plan you will pay off a fixed annual or graduated reimbursement amount over a period not to go over 25 years. This plan is good for parents who need to make smaller monthly payments. Because repayment period is 25 years they are going to pay more interest.

  – Graduated Repayment Plan

Under this repayment plan your payments will begin low and rise every two years during 10 years repayment period.

Additional Information

The Direct PLUS Loan paid to a parent cannot be transferred to the student. Repaying the PLUS Loan is parent’s responsibility. Besides parents, graduate students and professional degree students can also apply for the Direct PLUS Loan for their own expenses.

The Direct PLUS Loan can be consolidated throughout the federal student loan consolidation plan. The PLUS loan can also been canceled under specific conditions.

Additional student loan plans provided under Direct Loan Program include Direct Perkins Loans, Direct Stafford Loans, Direct Federal Student Loans and Direct Consolidation Loans.

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