With the school year about to begin, parents reviewing their college-aged children’s financial aid award letters may find they’re having trouble meeting their expected family contribution. For situations like these, when parents need some help meeting their undergraduate’s educational expenses, a PLUS loan could provide the financing they need, says NextStudent, a leading Phoenix-based education funding company.
What Is a PLUS Loan?
A PLUS loan (Parent Loan for Undergraduate Students) is a federal education loan that can help creditworthy parents meet their undergraduate child’s educational expenses. PLUS loans are non–need-based, so as long as parents and children meet the eligibility requirements, parents can qualify for PLUS assistance, regardless of their income or assets.
Either parent may apply for a PLUS loan from NextStudent, and upon approval, parents may borrow up to the annual PLUS limit, which is the cost of attendance less any other financial aid (such as scholarships, grants, Stafford student loans, work-study) their child has received. Besides tuition and room and board, the cost of attendance also includes a reasonable allowance for other education-related expenses, such as student fees, books and educational supplies.
What Are the Advantages of a PLUS Loan From NextStudent?
PLUS loans from NextStudent feature several benefits for parents of undergraduates:
1. No prepayment penalties: Borrowers may pay off a PLUS loan early without being assessed any additional charges.
2. Fixed interest rate: PLUS loans taken out after July 1, 2006, have a fixed interest rate of 8.5%.
3. Non–need-based: Eligible parents can qualify regardless of income.
4. Forbearance and deferment benefits: Borrowers experiencing financial difficulties may temporarily postpone making payments without affecting their credit rating.
5. Consolidation benefits: A parent may consolidate his or her PLUS loan(s) and take advantage of all the features of federal student loan consolidation.
6. Co-signers allowed: A parent who doesn’t meet the credit requirements for a PLUS loan may apply with an eligible co-signer.
7. Mid-year application: Parents may still apply for a PLUS loan in the middle of the school year. Families should contact a student’s financial aid office for the exact final deadline.
Who Is Eligible for a PLUS Loan From NextStudent?
To be eligible for a PLUS loan from NextStudent, a borrower must be a U.S. citizen or permanent resident and be deemed “creditworthy.” To qualify as creditworthy, borrowers may not be in default on any federal student loan and may not have derogatory items such as bankruptcies, foreclosures, tax liens or collections within the last five years on their credit report. If the parent applicant doesn’t meet the credit eligibility requirements for a Federal PLUS Loan from NextStudent, he or she may apply with a co-signer who does meet those requirements.
A PLUS borrower must be a parent or legal guardian of an eligible undergraduate student. To be considered an eligible student, a child:
1. Must be enrolled as an undergraduate at least half time and must maintain satisfactory academic progress, as set by the school
2. Must be under 24
3. Must be single with no dependents
4. May not be a ward of the court, a military veteran, or in the military
5. Must be a U.S. citizen or permanent resident
6. May not be in default on any federal student loans
PLUS loans from NextStudent not only provide eligible parents a way to help pay for their children’s education with a federally guaranteed low-interest student loan, but they give families another option for college financing that serves as an alternative to dipping into the family savings or borrowing against a home.
For parents with undergraduate children who don’t qualify for need-based financial aid or who receive a financial aid award that doesn’t cover their entire cost of attendance, or for parents who just need a little help meeting their expected family contribution to their children’s college financing, a Federal PLUS Loan from NextStudent could provide the help they’re looking for.
NextStudent believes that getting an education is the best investment you can make, and we are dedicated to helping you pursue your education dreams by making college funding simple. Learn more about Student Loans, Private Student Loans and Student Loan Consolidation.
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