Applying for financial aid for college can be a daunting task, especially for parents of students who are planning to attend college. One option that many parents consider is the Parent PLUS Loan, which is a federal loan that can be used to cover the cost of attendance for a dependent undergraduate student.
In this article, we’ll walk you through the process of applying for a Parent PLUS Loan, including the eligibility requirements, the application process, and the repayment terms. We’ll also provide some tips for saving money on your Parent PLUS Loan and answer some common questions about the loan.
The Parent PLUS Loan is a great option for parents who are looking to help their child pay for college. However, it’s important to understand the eligibility requirements and the repayment terms before you apply for the loan. By following the steps outlined in this article, you can increase your chances of getting approved for a Parent PLUS Loan and make sure that you’re able to repay the loan on time.
parent plus loans fafsa
Parent PLUS Loans are federal loans for parents of dependent undergraduate students.
- Borrow up to cost of attendance
- Fixed interest rate (7.54% for 2022-23)
- 10-year repayment term
- No prepayment penalty
- Apply through FAFSA
- Good credit required
- Cosigner may be needed
- Loan forgiveness available
Parent PLUS Loans can be a helpful way to cover the cost of college for your child. However, it’s important to understand the terms of the loan before you apply. Make sure you can afford the monthly payments and that you’re aware of the potential risks involved.
Borrow up to cost of attendance
The amount you can borrow with a Parent PLUS Loan is equal to the cost of attendance (COA) for your child’s school, minus any other financial aid that they receive. The COA includes tuition and fees, room and board, books and supplies, and other expenses related to attending college.
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COA varies by school
The COA can vary significantly from one school to another. Be sure to check the COA for your child’s school before you apply for a Parent PLUS Loan.
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No cap on borrowing
There is no cap on the amount you can borrow with a Parent PLUS Loan, as long as it does not exceed the COA. This means that you can borrow the full amount of your child’s COA, even if it is more than the amount of the federal student loans that your child is eligible for.
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Other financial aid reduces loan amount
The amount of your Parent PLUS Loan will be reduced by any other financial aid that your child receives, such as scholarships, grants, and federal student loans. This is because the goal of financial aid is to cover the full cost of attendance, and the Parent PLUS Loan is intended to fill in any gaps.
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Budget carefully
When you’re budgeting for college, it’s important to take into account the full cost of attendance, including the amount you’ll need to borrow with a Parent PLUS Loan. Make sure you can afford the monthly payments on the loan before you apply.
Parent PLUS Loans can be a helpful way to cover the cost of college for your child. However, it’s important to borrow responsibly and to make sure you can afford the monthly payments. By budgeting carefully and understanding the terms of the loan, you can help your child achieve their educational goals without taking on too much debt.
Fixed interest rate (7.54% for 2022-23)
Parent PLUS Loans have a fixed interest rate, which means that the interest rate will not change over the life of the loan. The interest rate for Parent PLUS Loans is set by the U.S. Department of Education and is the same for all borrowers.
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Current interest rate
The current interest rate for Parent PLUS Loans is 7.54% for loans disbursed on or after July 1, 2022, and before July 1, 2023.
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Fixed for life of loan
Once your Parent PLUS Loan is disbursed, the interest rate will remain the same for the life of the loan. This means that you will know exactly how much you will pay in interest over the life of the loan.
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Compare to other loans
The interest rate on Parent PLUS Loans is higher than the interest rate on federal student loans. However, it is lower than the interest rate on many private student loans.
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Impact on monthly payments
The interest rate on your Parent PLUS Loan will have a significant impact on your monthly payments. A higher interest rate will result in higher monthly payments.
When you’re considering a Parent PLUS Loan, it’s important to compare the interest rate to the interest rates on other loans that you may be eligible for. You should also consider the impact of the interest rate on your monthly payments. By understanding the interest rate on Parent PLUS Loans, you can make an informed decision about whether or not this loan is the right choice for you.
10-year repayment term
Parent PLUS Loans have a 10-year repayment term, which means that you have 10 years to repay the loan in full. The repayment period begins six months after your child graduates, leaves school, or drops below half-time enrollment.
There are two repayment plans available for Parent PLUS Loans: the Standard Repayment Plan and the Graduated Repayment Plan. Under the Standard Repayment Plan, you will make fixed monthly payments over the 10-year repayment period. Under the Graduated Repayment Plan, your monthly payments will start out lower and then gradually increase over the 10-year repayment period.
The amount of your monthly payments will depend on the amount you borrowed and the repayment plan that you choose. You can use the Parent PLUS Loan Repayment Estimator to get an estimate of your monthly payments.
It’s important to note that you can prepay your Parent PLUS Loan at any time without penalty. This means that you can pay off the loan faster than the 10-year repayment period if you have the extra money to do so.
If you have difficulty making your monthly payments, you may be eligible for deferment or forbearance. Deferment allows you to temporarily postpone your loan payments, while forbearance allows you to temporarily reduce or suspend your loan payments.
The 10-year repayment term for Parent PLUS Loans is relatively short compared to the repayment terms for other types of federal student loans. This means that you will have to make higher monthly payments in order to repay the loan in full within 10 years. However, you can prepay the loan at any time without penalty, and you may be eligible for deferment or forbearance if you have difficulty making your monthly payments.
No prepayment penalty
Parent PLUS Loans do not have a prepayment penalty. This means that you can pay off the loan early without having to pay a fee. This can save you money on interest over the life of the loan.
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Pay off loan faster
If you have the extra money, you can use it to pay off your Parent PLUS Loan faster. This will save you money on interest and help you get out of debt sooner.
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Make extra payments
You can make extra payments on your Parent PLUS Loan at any time. You can make a one-time extra payment, or you can set up a recurring extra payment.
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Apply extra payments to principal
When you make extra payments, you can specify that the payments should be applied to the principal balance of the loan. This will help you pay down the loan faster and save money on interest.
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No limit on extra payments
There is no limit on the amount of extra payments that you can make on your Parent PLUS Loan. You can make as many extra payments as you want, whenever you want.
If you’re considering a Parent PLUS Loan, it’s important to know that you can prepay the loan at any time without penalty. This can save you money on interest and help you get out of debt sooner. If you have the extra money, consider making extra payments on your Parent PLUS Loan to save even more money.
Apply through FAFSA
To apply for a Parent PLUS Loan, you must first complete the Free Application for Federal Student Aid (FAFSA). The FAFSA is a form that collects information about your family’s financial situation. This information is used to determine your eligibility for federal student aid, including Parent PLUS Loans.
You can apply for the FAFSA online or by mail. The FAFSA is available on October 1st for the following school year. You should apply for the FAFSA as soon as possible after it becomes available.
Once you have submitted the FAFSA, you will receive a Student Aid Report (SAR). The SAR will show you the amount of federal student aid that you are eligible for. If you are eligible for a Parent PLUS Loan, you will need to complete a Parent PLUS Loan application.
The Parent PLUS Loan application is available online. You will need to provide information about your income, assets, and credit history. You will also need to provide the name and Social Security number of your child.
Once you have submitted the Parent PLUS Loan application, it will be reviewed by the U.S. Department of Education. If you are approved for the loan, you will receive a loan approval letter. The loan approval letter will tell you the amount of the loan that you have been approved for and the interest rate on the loan.
Applying for a Parent PLUS Loan is a relatively simple process. However, it’s important to start the process early. The FAFSA opens on October 1st for the following school year, and you should apply as soon as possible after it becomes available. This will give you plenty of time to complete the Parent PLUS Loan application and get the loan approved before the school year starts.
Good credit required
To be eligible for a Parent PLUS Loan, you must have good credit. This means that you have a history of paying your bills on time and that you have a low level of debt.
The U.S. Department of Education uses a credit score to determine your eligibility for a Parent PLUS Loan. The credit score is a number that lenders use to assess your creditworthiness. A higher credit score means that you are a lower risk to lenders.
The minimum credit score required for a Parent PLUS Loan is 670. However, some lenders may have higher credit score requirements. If you have a credit score below 670, you may still be able to get a Parent PLUS Loan if you have a cosigner with good credit.
A cosigner is someone who agrees to repay the loan if you are unable to do so. A cosigner can be a spouse, a parent, or another creditworthy individual.
If you are not sure if you have good credit, you can check your credit score for free at AnnualCreditReport.com. You can also get a free credit report from each of the three major credit bureaus once per year.
If you have bad credit, there are a few things you can do to improve your credit score before you apply for a Parent PLUS Loan. You can pay down your debt, make your payments on time, and avoid taking on new debt. You can also get a credit builder loan to help you establish a history of on-time payments.
Cosigner may be needed
If you have bad credit or no credit history, you may need a cosigner to get a Parent PLUS Loan. A cosigner is someone who agrees to repay the loan if you are unable to do so. A cosigner can be a spouse, a parent, or another creditworthy individual.
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Cosigner must have good credit
The cosigner must have good credit in order to be approved for the loan. The cosigner’s credit score will be used to determine the interest rate on the loan.
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Cosigner is legally responsible for the loan
The cosigner is legally responsible for the loan if you are unable to repay it. This means that the cosigner’s credit score and financial reputation will be damaged if you default on the loan.
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Cosigner can be released from the loan
The cosigner can be released from the loan after you have made a certain number of on-time payments. The number of payments required varies depending on the lender.
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Find a cosigner who is willing and able to repay the loan
Before you ask someone to be your cosigner, make sure that they are willing and able to repay the loan if you are unable to do so. You should also make sure that they understand the risks involved in cosigning a loan.
If you need a cosigner to get a Parent PLUS Loan, it’s important to choose someone who has good credit and who is willing and able to repay the loan if you are unable to do so. You should also make sure that you understand the risks involved in cosigning a loan.
Loan forgiveness available
Parent PLUS Loans are eligible for loan forgiveness under certain circumstances. These circumstances include:
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Public service loan forgiveness
If you work in public service for 10 years while making payments on your Parent PLUS Loan, you may be eligible for loan forgiveness. Public service jobs include teaching, nursing, social work, and government jobs.
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Teacher loan forgiveness
If you teach full-time for five consecutive years in a low-income school, you may be eligible for loan forgiveness. The amount of loan forgiveness that you receive will depend on the number of years that you teach.
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Disability discharge
If you become permanently disabled, you may be eligible for a discharge of your Parent PLUS Loan. You must provide documentation from a doctor to prove that you are disabled.
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Death discharge
If you die, your Parent PLUS Loan will be discharged. Your estate will not be responsible for repaying the loan.
If you think that you may be eligible for loan forgiveness, you should contact your loan servicer to learn more. You can also find more information about loan forgiveness on the U.S. Department of Education’s website.
Parent PLUS Loans are a good option for parents who are looking to help their children pay for college. However, it’s important to understand the terms of the loan before you apply. Make sure you can afford the monthly payments and that you’re aware of the potential risks involved. By understanding the terms of the loan and by taking advantage of loan forgiveness programs, you can help your child achieve their educational goals without taking on too much debt.
FAQ
Here are some frequently asked questions about Parent PLUS Loans:
Question 1: What is a Parent PLUS Loan?
Answer 1: A Parent PLUS Loan is a federal loan that parents can use to help their children pay for college.
Question 2: How much can I borrow with a Parent PLUS Loan?
Answer 2: You can borrow up to the cost of attendance for your child’s school, minus any other financial aid that they receive.
Question 3: What is the interest rate on a Parent PLUS Loan?
Answer 3: The interest rate on a Parent PLUS Loan is fixed at 7.54% for loans disbursed on or after July 1, 2022, and before July 1, 2023.
Question 4: What is the repayment term for a Parent PLUS Loan?
Answer 4: The repayment term for a Parent PLUS Loan is 10 years.
Question 5: Do I need good credit to get a Parent PLUS Loan?
Answer 5: Yes, you need good credit to get a Parent PLUS Loan. The minimum credit score required is 670.
Question 6: Can I get a Parent PLUS Loan if I have bad credit?
Answer 6: Yes, you can get a Parent PLUS Loan if you have bad credit, but you will need a cosigner with good credit.
Question 7: What are the benefits of a Parent PLUS Loan?
Answer 7: Parent PLUS Loans have several benefits, including low interest rates, fixed interest rates, and no prepayment penalty.
Question 8: What are the risks of a Parent PLUS Loan?
Answer 8: Parent PLUS Loans also have some risks, including the risk of high monthly payments, the risk of default, and the risk of damage to your credit score.
If you have any other questions about Parent PLUS Loans, you should contact your loan servicer or the U.S. Department of Education.
Now that you know more about Parent PLUS Loans, you can start to decide if this type of loan is right for you. If you decide to apply for a Parent PLUS Loan, be sure to shop around for the best interest rate and terms. You should also make sure that you understand the risks involved before you sign the loan agreement.
Tips
Here are a few tips for parents who are considering a Parent PLUS Loan:
Tip 1: Shop around for the best interest rate.
Not all lenders offer the same interest rate on Parent PLUS Loans. Be sure to shop around and compare interest rates before you apply for a loan. You can use the Parent PLUS Loan Comparison Tool on the U.S. Department of Education’s website to compare interest rates from different lenders.
Tip 2: Make sure you can afford the monthly payments.
Before you apply for a Parent PLUS Loan, make sure you can afford the monthly payments. The monthly payments on a Parent PLUS Loan can be high, so it’s important to budget carefully before you apply for the loan. You can use the Parent PLUS Loan Repayment Estimator on the U.S. Department of Education’s website to estimate your monthly payments.
Tip 3: Understand the risks involved.
There are some risks involved in taking out a Parent PLUS Loan. These risks include the risk of high monthly payments, the risk of default, and the risk of damage to your credit score. Be sure to understand the risks involved before you sign the loan agreement.
Tip 4: Consider other options for paying for college.
There are other options for paying for college besides Parent PLUS Loans. These options include scholarships, grants, and student loans. You should explore all of your options before you apply for a Parent PLUS Loan.
By following these tips, you can help ensure that you get the best possible Parent PLUS Loan and that you can afford to repay the loan on time.
Parent PLUS Loans can be a helpful way to pay for college, but it’s important to understand the terms of the loan before you apply. By following the tips in this article, you can help ensure that you get the best possible Parent PLUS Loan and that you can afford to repay the loan on time.
Conclusion
Parent PLUS Loans can be a helpful way to pay for college, but it’s important to understand the terms of the loan before you apply. Parent PLUS Loans have several benefits, including low interest rates, fixed interest rates, and no prepayment penalty. However, Parent PLUS Loans also have some risks, including the risk of high monthly payments, the risk of default, and the risk of damage to your credit score.
If you’re considering a Parent PLUS Loan, be sure to shop around for the best interest rate and terms. You should also make sure that you can afford the monthly payments and that you understand the risks involved. If you have any questions about Parent PLUS Loans, you should contact your loan servicer or the U.S. Department of Education.
By following the tips in this article, you can help ensure that you get the best possible Parent PLUS Loan and that you can afford to repay the loan on time. Parent PLUS Loans can be a helpful way to help your child achieve their educational goals, but it’s important to borrow responsibly.