FAQ’s for PLUS Loans
Following are some common questions about PLUS loans.
TuitionChoice has provided general and helpful answers to better inform you
to what a PLUS loan is and how it works. For official definitions and
regulations, please refer the Department of Education’s website at
www.studentaid.ed.gov.
- What does PLUS stand for?
PLUS stands for, Parent Loan for Undergraduate Students.
- Who’s name is the PLUS loan in?
The PLUS loan is a loan that is in the parents’ name and not the students’ name,
unlike the Stafford Loans and Direct Loans, Perkins Loan, and most private
educational loans as offered on TuitionChoice.
- How do I apply for a PLUS loan?
There are many ways and many different agencies where you can apply for
a PLUS loan. Check with your school as to their preferred method of
certifying loans and processing PLUS loans as different schools will have
different processes. PLUS loans can be applied for over-the-phone and
on-line in most cases. Your school’s Financial Aid Office will be able
to direct you to the easiest method for them and for you.
- What is the interest rate for the PLUS loan?
The interest rate for the PLUS loan is set by the federal government at 8.5%.
- Is the interest rate the same for all lenders for the PLUS loan?
All lenders will start with the same interest rate of 8.5% but different
lenders might offer different borrower benefits in which the rate can be
lowered, depending on the benefits elected by the borrower. Check with
your school’s Financial Aid Office and the lenders they use or recommend
as to the best benefits and rates for PLUS loans at your school.
- Will the interest rate change for my PLUS loan?
The interest rate for PLUS loans is a fixed rate, set by the government
at 8.5% as of July 1st 2006. That rate can only change as the borrower
benefits that are elected by the borrower are changed by the borrower.
- Do I need to file the FAFSA to apply for a PLUS loan?
No. You can apply for the PLUS loan without filing the federal FAFSA form.
It is suggested that you do file the FAFSA however at,
www.fafsa.ed.gov,
as you might be eligible for additional aid.
- How much can I borrow in a PLUS loan?
Borrowers are allowed to borrow up to the cost of education minus
all other financial aid. If there is no other financial aid available,
you may borrow up to the full cost of education, as long as the lender
approves you for that loan amount.
- Do all schools accept the PLUS loan?
All schools who participate and accept federal funding should participate
in the federal PLUS loan program. There are some schools who do not accept
federal funding however, and they would then not accept the PLUS loan as
payment for their educational costs.
- Is the PLUS loan a better option than private student loans?
Generally, the PLUS loan will be a less expensive loan over the full
life of the loan. The interest rate is a fixed rate, unlike private
student loans which are variable rate loans. Some parents can not or
will not apply for a PLUS loan or they will not be approved for a PLUS
loan and, in that case, the loan which enables a student to obtain
their education might be the best option.
- When do I have to start paying back my PLUS loan?
Most PLUS loans require payments to begin 60 days after the second
disbursement of the year, which would generally be sometime in March,
after the disbursement is made at the beginning the spring term.
Different Lenders and different school calendars could change that
schedule so you should check with your school and your lender of
choice. It is possible, depending on the lender, to request and receive
a payment deferment for up to 4 years. Again, check with your lender
to see if they specifically offer that benefit.
- Do all lenders offer payment deferments of PLUS loans?
Many lenders will allow payment deferment for up to 4 years but not
all lenders will offer that option. Check with your lender of choice
to see if they offer that benefit.
- Do I need to apply for the PLUS loan each year?
Yes. You must apply each year for the PLUS loan and request the amount
that you need for that specific year.
- What is the difference between the Parent PLUS loan and the Graduate PLUS loan?
Parent PLUS loans are only for the parents of dependant undergraduate
students to pay for their education. Independent students are not
eligible to apply for PLUS loans as they have increased Stafford loan eligibility.
Graduate PLUS loans are only for students enrolled in a graduate program.
- Does a PLUS loan denial automatically enable my son/daughter to receive additional Stafford loan money?
For parents of dependant undergraduate students who are denied the PLUS
loan, their student will then be eligible for an additional amount of
Stafford loan, depending on their year in school. Click here for Stafford
loan limits.
- Can I defer my PLUS loan payments?
Yes you can, depending on the lender you choose and if they offer that
benefit to their borrowers. Not all lenders will offer payment deferments.
If it is an offered benefit, parents will usually need to complete a simple
application each year they wish to defer their payments. Check with your
lender for their specific requirements.
- Are there any fees for the PLUS loan?
Yes, it is possible that there may be a fee to obtain a PLUS loan.
Check with your lender to see if they charge a fee for the loan and,
if they do, how much of a fee do they charge. A common fee amount,
if charged, is 3% of the actual disbursed loan value.