Financial aid guide for students and parents

Federal PLUS Loan is referred as Federal Direct Parent Loan for undergraduate students. It is only type of Federal loan which is offered to parents whose child’s education entirely depends on them. Step-parents are also eligible for Federal PLUS loan if their assets and income are declared in the FAFSA. If both, husband and wife want to take parents loan for education of their child, then both of them have to finish loan application process individually.

Borrowers must finish the Master Promissory Note (MPN) to initiate the loan application procedure. The credit check will be conducted in next step and applicant receives his confirmation after meeting the credit guidelines. If the loan is approved, then the borrowers can receive the fund which is entire cost of attendance minus other form of financial aid student already has received. In order to get eligible for Federal PLUS loan, borrower must be biological or step-parent or adoptive parent of student. The child should be dependent on his parent and he should finish half of the school course from the institute which is included in direct loan program.

Parents who are applying for the loan must have sound credit history to become eligible. If the parents are not able to pass the credit test, then they can be eligible for loan only if their relative or friend endorses the loan. The parents and students involved in Federal PLUS loan must be US citizens. They must not be part of defaulters list of federal education loan. In order to process your loan, the Department of Education of US will charge loan origination fee of around 4%. The borrowers of direct loan may avail a rebate of 1.5% and reduction in upfront charges up to 2.5%. Borrowers have to make their initial 12 payments on time to avail the loan benefit properly. Loan fee is reduced in equivalent proportion from every installment of borrower’s Federal PLUS loan.

In Federal PLUS Loan, borrower has a facility to decline the loan at any point of time and student can borrow any other unsecured loan on his own name. Borrowers repay their installments to the lender as per the terms mentioned in disclosure statement. Loan provider or lender provides frequent updates to the borrower on his status of Federal PLUS loan.