Plus Loan

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Is a PLUS Loan Right for me?

When trying to figure out how you are going to pay for college, you've probably stumbled across something called a Plus loan. It's not the most common loan available, so you may not be completely familiar with it or how it works. Basically it is a loan that your parents can take out to pay for your education if you are an undergraduate student enrolled at least part time. There are two types of loans available: a Direct PLUS Loan and a FFEL PLUS Loan. There are certain stipulations on each loan and you must qualify.

Direct PLUS Loan

With this PLUS loan program, the U.S. Department of Education is the lender. Your parents usually have to pass a credit check though this may be waved in certain circumstances. Certain citizenship requirements must also be met. Although it is a Federal government run program, the funds are generally dispersed by the school.

FFEL PLUS Loan

Under this PLUS Loan program the government is not involved and you must find a participating lender to fund the loan. Regardless of the loan, the interest rates are capped at 9% though they tend to be a bit less than that.

How much can my parents borrow for me?

Your parents should be able to get a PLUS loan for the cost of attendance, typically determined by your school, minus any other financial aid you have receive through the FAFSA or otherwise.

How do I get the money?

The money is generally dispersed in two payments through the school you are attending. The money is first applied to your tuition or other expenses and in some cases, your parents can allow you to get the remainder of the money but typically they would receive a check for the remainder of the loan and disperse the funds at their discretion.