The Free Application for Federal Student Aid (FAFSA) is a must-do for any college-bound student. It's the gateway to federal financial aid, including grants, scholarships, and loans. But what if your child's financial aid package doesn't cover the full cost of their education? That's where the FAFSA Parent PLUS Loan comes in.
The Parent PLUS Loan is a federal loan that parents can take out to help pay for their child's undergraduate or graduate education. It's a great option for parents who want to help their children with the cost of college but don't have the savings to do so.
In this article, we'll cover everything you need to know about the FAFSA Parent PLUS Loan, including who is eligible, how to apply, and what the terms and conditions are. So, if you're a parent of a college-bound student, read on to learn more about this valuable financial aid option.
FAFSA Parent PLUS Loan
The FAFSA Parent PLUS Loan is a federal loan that parents can use to help pay for their child's college education.
- Federal loan for parents
- Undergraduate and graduate students
- No credit check
- Fixed interest rate
- Repayment begins after 6 months
- Deferment and forbearance options
- Loan forgiveness available
The FAFSA Parent PLUS Loan can be a helpful way for parents to help their children pay for college. However, it's important to understand the terms and conditions of the loan before you apply.
Federal loan for parents
The FAFSA Parent PLUS Loan is a federal loan that parents can take out to help pay for their child's undergraduate or graduate education. It's a great option for parents who want to help their children with the cost of college but don't have the savings to do so.
To be eligible for a Parent PLUS Loan, you must:
- Be the parent of a dependent undergraduate or graduate student who is enrolled at least half-time in a degree program at an eligible school.
- Have a good credit history.
- Not have an adverse credit history, such as a bankruptcy or default on a federal student loan.
If you meet these eligibility requirements, you can apply for a Parent PLUS Loan online at the Federal Student Aid website. The maximum amount you can borrow is the cost of your child's education, minus any other financial aid they receive. The interest rate on Parent PLUS Loans is fixed and is set each year by the U.S. Department of Education.
Repayment of a Parent PLUS Loan begins six months after your child graduates, leaves school, or drops below half-time enrollment. You can choose to repay the loan over a period of 10 to 25 years.
The Parent PLUS Loan can be a helpful way for parents to help their children pay for college. However, it's important to understand the terms and conditions of the loan before you apply. If you have any questions about the Parent PLUS Loan, you can contact the Federal Student Aid Information Center at 1-800-433-3243.
Undergraduate and graduate students
The FAFSA Parent PLUS Loan can be used to pay for the cost of education for both undergraduate and graduate students. However, there are some important differences between the two types of loans.
Undergraduate students:- The maximum amount you can borrow is the cost of attendance minus any other financial aid your child receives.
- The interest rate is fixed and is set each year by the U.S. Department of Education.
- Repayment begins six months after your child graduates, leaves school, or drops below half-time enrollment.
- The maximum amount you can borrow is the cost of attendance minus any other financial aid your child receives, up to a limit of $20,500 per year.
- The interest rate is variable and is based on the 10-year Treasury note plus a spread. The current interest rate is 7.54%.
- Repayment begins six months after your child graduates, leaves school, or drops below half-time enrollment.
It's important to note that the Parent PLUS Loan is not a subsidized loan. This means that interest begins accruing on the loan as soon as it is disbursed. However, you can choose to defer interest payments while your child is in school.
If you're considering taking out a Parent PLUS Loan to help your child pay for college, it's important to compare the terms and conditions of the loan with other types of loans, such as private student loans. You should also make sure that you understand the repayment options and the potential consequences of defaulting on the loan.
No credit check
One of the biggest advantages of the FAFSA Parent PLUS Loan is that there is no credit check. This means that you can qualify for the loan even if you have bad credit or no credit history at all.
This is a significant advantage over private student loans, which typically require a credit check. If you have bad credit, you may not be able to qualify for a private student loan, or you may only be able to qualify for a loan with a high interest rate.
The FAFSA Parent PLUS Loan is also a good option for parents who are just starting to build their credit. By making regular payments on the loan, you can help to improve your credit score over time.
However, it's important to note that the Parent PLUS Loan is not a free loan. You are responsible for paying back the loan, plus interest, over time. If you default on the loan, you could damage your credit score and face other financial consequences.
If you're considering taking out a Parent PLUS Loan, it's important to weigh the pros and cons carefully. You should also make sure that you understand the terms and conditions of the loan before you apply.
Fixed interest rate
The FAFSA Parent PLUS Loan has a fixed interest rate, which means that the interest rate will not change over the life of the loan. This is in contrast to variable interest rate loans, which can fluctuate over time.
- Fixed for the life of the loan
Once you take out a Parent PLUS Loan, the interest rate will stay the same for the entire time you are repaying the loan.
- Set each year by the U.S. Department of Education
The interest rate on Parent PLUS Loans is set each year by the U.S. Department of Education. The current interest rate for Parent PLUS Loans is 7.54%.
- Provides certainty and predictability
A fixed interest rate loan provides certainty and predictability. You will know exactly how much your monthly payments will be over the life of the loan.
- Easier to budget for
A fixed interest rate loan is easier to budget for than a variable interest rate loan. You can set a fixed amount of money aside each month to pay towards your loan, and you will not have to worry about your payments increasing in the future.
The fixed interest rate on the Parent PLUS Loan is a significant advantage, especially in a rising interest rate environment. If interest rates continue to rise, you will be glad that you have a fixed interest rate loan.
Repayment begins after 6 months
Repayment of a Parent PLUS Loan begins six months after your child graduates, leaves school, or drops below half-time enrollment. This is known as the grace period.
- Six-month grace period
After your child graduates, leaves school, or drops below half-time enrollment, you will have a six-month grace period before you have to start repaying your Parent PLUS Loan.
- Make payments during grace period
You can choose to make payments during the grace period, but you are not required to do so. If you make payments during the grace period, the interest that accrues on your loan will be capitalized, which means that it will be added to the principal balance of your loan.
- Repayment options
Once the grace period ends, you will have several repayment options to choose from. You can choose to repay your loan over a period of 10 to 25 years. You can also choose to make graduated or extended repayments.
- Deferment and forbearance
If you are experiencing financial difficulty, you may be able to defer or forbear your Parent PLUS Loan. Deferment allows you to temporarily postpone making payments on your loan. Forbearance allows you to temporarily reduce your monthly payments.
It's important to start making payments on your Parent PLUS Loan as soon as possible after the grace period ends. The sooner you start making payments, the sooner you will pay off your loan and save money on interest.
Deferment and forbearance options
If you are experiencing financial difficulty, you may be able to defer or forbear your Parent PLUS Loan. Deferment allows you to temporarily postpone making payments on your loan. Forbearance allows you to temporarily reduce your monthly payments.
- Deferment
Deferment is available for Parent PLUS Loan borrowers who are:
- Enrolled at least half-time in a qualified graduate fellowship program
- Enrolled at least half-time in an approved rehabilitation training program for individuals with disabilities
- Serving in the military on active duty status
- Temporarily totally disabled
- Caring for a spouse or child who is temporarily totally disabled
- Forbearance
Forbearance is available for Parent PLUS Loan borrowers who are experiencing a temporary financial hardship, such as:
- Loss of employment
- Reduction in income
- High medical expenses
- Natural disaster
- How to apply
To apply for deferment or forbearance, you must contact your loan servicer. You can find your loan servicer on the National Student Loan Data System website.
- Impact on your loan
While your loan is in deferment or forbearance, you will not have to make payments. However, interest will continue to accrue on your loan. This means that the total amount you owe on your loan will increase.
Deferment and forbearance can be helpful options for Parent PLUS Loan borrowers who are experiencing financial difficulty. However, it's important to understand that these options are not a long-term solution. You should make every effort to start making payments on your loan as soon as possible.
Loan forgiveness available
Parent PLUS Loan borrowers may be eligible for loan forgiveness under certain circumstances. These circumstances include:
- Public Service Loan Forgiveness (PSLF)
PSLF is a federal program that forgives the remaining balance on your Parent PLUS Loan after you have made 120 qualifying payments while working full-time in a public service job. Public service jobs include teaching, nursing, social work, and government service.
- Teacher Loan Forgiveness
Teacher Loan Forgiveness is a federal program that forgives up to $17,500 of your Parent PLUS Loan balance if you teach full-time for five consecutive years in a low-income school or educational service agency.
- Income-Driven Repayment (IDR) Forgiveness
IDR Forgiveness is a federal program that forgives the remaining balance on your Parent PLUS Loan after you have made 20 or 25 years of qualifying payments under an IDR plan. IDR plans are repayment plans that cap your monthly payments at a percentage of your discretionary income.
- Death or disability discharge
If you die or become totally and permanently disabled, your Parent PLUS Loan may be discharged. This means that the loan will be forgiven and you will not owe any more money on it.
If you think you may be eligible for loan forgiveness, you should contact your loan servicer to learn more. You can find your loan servicer on the National Student Loan Data System website.
FAQ
The FAFSA Parent PLUS Loan can be a helpful way for parents to help their children pay for college. However, it's important to understand the terms and conditions of the loan before you apply. Here are some frequently asked questions about the Parent PLUS Loan:
Question 1: Who is eligible for a Parent PLUS Loan?
Answer: To be eligible for a Parent PLUS Loan, you must be the parent of a dependent undergraduate or graduate student who is enrolled at least half-time in a degree program at an eligible school. You must also have a good credit history and not have an adverse credit history, such as a bankruptcy or default on a federal student loan.
Question 2: What is the interest rate on a Parent PLUS Loan?
Answer: The interest rate on Parent PLUS Loans is fixed and is set each year by the U.S. Department of Education. The current interest rate for Parent PLUS Loans is 7.54%.
Question 3: What is the repayment period for a Parent PLUS Loan?
Answer: Repayment of a Parent PLUS Loan begins six months after your child graduates, leaves school, or drops below half-time enrollment. You can choose to repay the loan over a period of 10 to 25 years.
Question 4: Can I defer or forbear my Parent PLUS Loan?
Answer: Yes, you may be able to defer or forbear your Parent PLUS Loan if you are experiencing financial difficulty. Deferment allows you to temporarily postpone making payments on your loan. Forbearance allows you to temporarily reduce your monthly payments.
Question 5: Is there any loan forgiveness available for Parent PLUS Loans?
Answer: Yes, there are several loan forgiveness programs available for Parent PLUS Loan borrowers, including Public Service Loan Forgiveness, Teacher Loan Forgiveness, and Income-Driven Repayment Forgiveness. If you think you may be eligible for loan forgiveness, you should contact your loan servicer to learn more.
Question 6: What happens if I default on my Parent PLUS Loan?
Answer: If you default on your Parent PLUS Loan, you could face serious consequences, such as damage to your credit score, wage garnishment, and loss of tax refunds.
Closing Paragraph for FAQ:
These are just some of the most frequently asked questions about the Parent PLUS Loan. If you have any other questions, you can contact your loan servicer or the Federal Student Aid Information Center at 1-800-433-3243.
Now that you know more about the Parent PLUS Loan, you can decide if it's the right option for you and your family. If you do decide to apply for a Parent PLUS Loan, be sure to compare the terms and conditions of the loan with other types of loans, such as private student loans. You should also make sure that you understand the repayment options and the potential consequences of defaulting on the loan.
Tips
Here are four practical tips for parents who are considering taking out a Parent PLUS Loan:
Tip 1: Compare the terms and conditions of the Parent PLUS Loan with other types of loans.
Before you apply for a Parent PLUS Loan, be sure to compare the terms and conditions of the loan with other types of loans, such as private student loans. Consider the interest rate, repayment period, and fees associated with each type of loan. You should also make sure that you understand the repayment options and the potential consequences of defaulting on the loan.
Tip 2: Make sure that you can afford the monthly payments.
Before you take out a Parent PLUS Loan, make sure that you can afford the monthly payments. Consider your current financial situation and your future income potential. You should also factor in the cost of other expenses, such as your child's tuition and living expenses.
Tip 3: Consider applying for a smaller loan amount.
If you are concerned about being able to repay the loan, you can consider applying for a smaller loan amount. You can also choose to repay the loan over a longer period of time, which will lower your monthly payments.
Tip 4: Explore other financial aid options.
Before you take out a Parent PLUS Loan, be sure to explore other financial aid options, such as scholarships, grants, and work-study. You can also consider taking out a private student loan. Private student loans typically have higher interest rates than Parent PLUS Loans, but they may offer more flexible repayment options.
Closing Paragraph for Tips:
By following these tips, you can help ensure that you are making the best financial decision for your family.
Now that you have all the information you need about the Parent PLUS Loan, you can decide if it's the right option for you and your family. If you do decide to apply for a Parent PLUS Loan, be sure to compare the terms and conditions of the loan with other types of loans, make sure that you can afford the monthly payments, consider applying for a smaller loan amount, and explore other financial aid options.
Conclusion
Summary of Main Points:
The Parent PLUS Loan is a federal loan that parents can use to help pay for their child's college education. The loan has several advantages, including a fixed interest rate, no credit check, and flexible repayment options. However, it's important to understand the terms and conditions of the loan before you apply. You should also make sure that you can afford the monthly payments and that you are exploring all of your financial aid options.
Closing Message:
The decision of whether or not to take out a Parent PLUS Loan is a big one. It's important to weigh the pros and cons carefully and to make sure that you are making the best financial decision for your family. If you have any questions about the Parent PLUS Loan, you can contact your loan servicer or the Federal Student Aid Information Center at 1-800-433-3243.