PLUS Loans

If you are a dependant student, and your parent or guardian is looking for a way to help you with your educational costs, the Federal PLUS Loan program may be the best option. The Federal PLUS Loan program can help you and your family bridge the gap between your educational costs and your other financial resources.

Your parents can take out a PLUS Loan that covers the cost of your online degree minus your existing aid and other financial resources. PLUS Loans offer interest rates that are fixed for the life of the loan and capped at a maximum of 9%. Repayment begins approximately 60 days after the disbursement of the loan, and is the responsibility of the parent or guardian who received the loan.

Similar to the Stafford Loan program for students, your school participates in either the William D. Ford Direct Loan Program, where your parents apply for a PLUS Loan directly from the government, or the Federal Family Education Loan Program (FFELP), where they can borrow from a private lender. Your financial aid counselor can give you more details about the PLUS Loan program.

PLUS Loan Credit Check
Unlike Stafford Loans, PLUS Loans are based on a borrower credit check. If your parent or guardian cannot pass the standard credit check, the PLUS Loan program offers credit counseling and options, including co-signing plans. Co-signing allows your parent or guardian to borrow a PLUS Loan with the help of a friend or relative who agrees to act as an 'endorser,' similar to a co-signer on a personal loan. If the loan is co-signed, all parties should be aware that the loan repayment does affect the credit of everyone involved. Paying a loan on time is good for personal credit, and a responsible payment plan can benefit everyone.

Students and their parents can obtain a PLUS Loan application from their school's financial aid office. Parents need to complete a promissory note, promising repayment of the loan. Depending on your school and state regulations, some additional paperwork may be required for the PLUS Loan.

Before your parents apply for a PLUS Loan, talk to them about your long-term plans. They will have to repay the PLUS Loan whether or not you complete your degree program, and failure to repay may negatively affect their credit.