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Parent PLUS Loan
Program
What is a Parent PLUS Loan?
The PLUS loan is a federally sponsored loan for parents/stepparents of undergraduate students. Stepparents are eligible as long as their information is included on the Free Application for Federal Student Aid (FAFSA). Parents borrow the loan from a bank, savings and loan or credit union.
Am I eligible for a Parent PLUS Loan?
If your child or stepchild is enrolled or accepted for enrollment in an undergraduate degree program at least half-time in a U.S. college, university or other eligible postsecondary institution, you may be eligible for a Federal Parent PLUS Loan.
Does my son or daughter need to complete the FAFSA (Free Application for Federal Student Aid) in order to apply for the Parent PLUS Loan?
No. You are not required to complete this free government application at www.fafsa.ed.gov , but it is a good idea to explore all federal and state financial aid options first, prior to applying for a Parent PLUS loan.
How do I apply?
You should contact the lender directly. Most lenders allow borrowers to apply for Federal Parent Loans by phone, fax and/or online. Many also offer a simple pre-approval process.
What will my interest rate be?
The interest rate is fixed at 8.50% on all PLUS Loans disbursed on or after July 01, 2008. Interest accrues on the unpaid balance of the loan from the date of disbursement by the lender until the entire principal balance is paid in full. Failure to make monthly or quarterly interest payments results in the interest being capitalized (added to the principal of the loan).
How much money am I eligible to borrow?
Unlike other types of financial aid, the Parent PLUS Loan is not need based. The maximum eligibility is determined by the Cost of Attendance minus any financial aid that the student has been awarded. In some cases, the PLUS loan can replace all or a portion of the expected resources. If the student will not be receiving financial aid of any kind, the parent can borrow the full cost of attendance. Please refer to your Offer of Financial Aid for the amount of PLUS that you are eligible to borrow.
Can I find out in advance if my credit check will be approved?
Approval or denial of the loan is based on the parent's credit history. A parent with adverse credit history may receive a loan by securing an endorser who does not have an adverse credit history. Contact the lender to determine if they have an endorser program.
Am I required to take a Parent PLUS Loan upon application?
No. Approval for a Parent PLUS Loan does not commit you to taking out the loan. If approved, you may contact your lender at any time before disbursement to cancel or reduce the loan request.
How will I receive my Parent PLUS Loan funds?
The Parent PLUS Loan is disbursed directly to the school. If the loan is a full year loan, the parent will receive one check during the Fall semester and one check during the Spring semester.
If the loan is a one-semester loan, the parent will receive one check shortly after the beginning date of the semester.
When will I have to begin repaying the Parent PLUS Loan?
Each lender determines their repayment schedule. In many cases, the first payment of interest and principal is due within 60 days after the loan is fully disbursed. However, some lenders offer the borrowers the opportunity to defer payment until the student graduates or drops below half-time. If, after obtaining a Parent PLUS loan, the student for whom the parent borrowed drops to less than half time or withdraws during the period for which the loan was intended, the entire amount is immediately due to the lender.
Factors to keep in mind when choosing a lender:
Customer Service
Stability of Lender
If Loans are Held or Sold
Borrower Benefits
On-line Lender Services
Repayment Options
Security
Debt Management Options
Additional Services
Step 1 -
Evaluate potential lenders. Factors to keep in mind when evaluating a lender: customer service; stability of lender; if loans are held by lender or sold; borrower benefits; on-line lender services; repayment options; security; debt management options; and additional services.
See Chart
Step 2 -Contact the lender to obtain a pre-approval or
denial by phone or on-line.
Step 3 -The lender will send SF State an electronic notice of your pre-approval or denial.
Step 4 -Your lender will send you a pre-printed
Application/Promissory Note or you can fill one out on-line.
Step 5 -SF State will electronically certify your
eligibility for the pre-approved loan.
Step 6 -Your lender will send the funds to SF State.
Step 7 -SF State will release the funds once requirements for student enrollment are confirmed. Most Alternative lenders will electronically transfer funds to SF State.
If the student has no outstanding financial obligations to SF State, the university mails a check directly to the student or initiates a direct deposit.
If the student owes money to SF State, the university deducts all obligations and forwards a balance check to the student or initiates a direct deposit.
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Last modified 06/06/2008
by Loan Nguyen.
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