Top Questions about Federal PLUS Loans*
Please be aware that due to current conditions in the student loan market in particular and in the financial sector in general, NextStudent is not currently able to accept any new PLUS, Grad PLUS, Stafford, or Federal Consolidation Loan applications. However, you may be able to apply for these federal student loans from one of our trusted partners. Click here for more information.
How is a Parent PLUS Loan different from a Stafford Loan?
Both loans are federally guaranteed, but the Parent PLUS Loan is made to the parents of dependent undergraduates, while the Stafford Loan is made directly to the student—in his or her name. Other differences are:
- Interest rates: The Parent PLUS Loan interest rate is quite low compared to other types of consumer financing.
- Repayment: Repayment on Federal Parent PLUS Loans begins within 60 days of final disbursement whereas Stafford Loan repayment is deferred until after graduation.
- Loan Amounts: Parents can borrow up to 100% of college education costs, including room and board, books and tuition. Federal Stafford Loan borrowing is capped at $2,625 and $3,500 for first- and second-year undergraduates, respectively (independent students may borrow an additional $4,000), and $5,500 for third- and fourth-year students (independent students may borrow an additional $5,000).
Is there a credit check required for a Parent PLUS Loan?
Yes, parents must pass federal guidelines for creditworthiness. These guidelines are generally less stringent than for other types of consumer credit, such as home equity loans and credit cards.
How much does a Parent PLUS Loan cost?
The Federal PLUS Loan has a 3% government origination fee and a 1% guarantee fee, which may be waived by the guarantor. Fees are taken out of the out of the proceeds of the loan, so there is no up-front money required to obtain the loan.
How are loan funds disbursed?
The funds will be distributed directly to the school’s financial aid office for scheduled payments over the course of the academic year. All federal loans have at least two disbursements, typically one for each school term. At most schools, the last disbursement will take place in January, and the repayment will normally start between February and March.
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Download a PDF Federal PLUS Loan Application