The Federal Parent Plus Loan is a loan applied for and guaranteed for by a parent on the behalf of an eligible dependent. The eligible dependent student must be enrolled in school for at least half of the time. The parents will have to have a good credit history. This loan can come from The Federal Family Education Loan Program (FFEL) or The William D Ford Direct Loan program (Direct Loan). They can not use both.
The very first thing to do is make sure that the school is acceptable to the lending agency. You may be wasting time if they are not eligible.
One difference in this Federal Parent Plus Loan is that there are no maximum income levels set. So as long as parents have fairly good credit, or a hardship reason, they should qualify.
The main purpose is so that a parent can borrow low interest funds for their children’s education. It may also be used for room and board, tuition and any other school related eligible expenses. Any monies that the student earned in the form of scholarships, etc. would be deducted.
At this time interest rate for the federal parent plus loan is variable and determined on July 1 of each year of the loan. For 2008 – 2009 the variable interest rate is 5.01%. Interest is charged from the time of the first disbursement until the loan is paid in full. There is also a fee of up to 4% that is applied to the federal government and the organization that administers the loan (depending upon which program was used) to help reduce the cost of the loan. Also, late fees and or collection fees may be applied to payments not made on schedule.
The loan may be paid off early, or even canceled under certain conditions. The loan can not be canceled just because the student decided not to finish the education. It may be canceled for instance if the school closed down.
If you have questions or need more information about loan discharge or repayments contact the Direct Loan Servicing Center at 1-800-848-0979, or go to www.dl.ed.gov. If you have questions about a FFEL PLUS Loan, you should contact the lender or agency holding the loan.
Every child deserves a good education. Here is a case where the federal government is really trying to help you with the Parent Plus Loan. You should take advantage of it.