If you're a parent of a dependent undergraduate student, you can apply for a Parent PLUS loan to help finance your child's education. A Parent PLUS loan is a federal student loan that is available to parents of dependent undergraduate students who have demonstrated financial need. The interest rate on a Parent PLUS loan is fixed at 7.54%, and the repayment period is up to 10 years.
To apply for a Parent PLUS loan, you'll need to complete the Free Application for Federal Student Aid (FAFSA). You can also apply for a Parent PLUS loan online or by mail. Once you've applied for a Parent PLUS loan, you'll need to provide the lender with your financial information, including your income and assets. The lender will then make a decision on your loan application.
If you're approved for a Parent PLUS loan, you'll need to sign a promissory note and complete a loan entrance counseling session. Once you've completed these steps, the lender will disburse the loan funds directly to your school. You can then use the loan funds to pay for your child's education expenses, such as tuition, fees, books, and supplies.
How to Apply for Parent PLUS Loan
To apply for a Parent PLUS loan, follow these 8 steps:
- Complete FAFSA
- Apply online or by mail
- Provide financial info
- Sign promissory note
- Complete loan counseling
- Receive loan funds
- Use funds for education expenses
- Repay loan
By following these steps and the information contained in the HTML, parents can successfully apply for a Parent PLUS loan to help finance their child's education.
Complete FAFSA
The Free Application for Federal Student Aid (FAFSA) is the first step in applying for a Parent PLUS loan. The FAFSA is a form that collects information about your family's financial situation, including your income, assets, and expenses. This information is used to determine your expected family contribution (EFC), which is the amount of money that your family is expected to contribute towards your child's education costs.
To complete the FAFSA, you will need to gather the following information:
- Your Social Security number
- Your spouse's Social Security number (if married)
- Your child's Social Security number
- Your Alien Registration Number (if you are not a U.S. citizen)
- Your federal income tax returns for the previous two years
- Your W-2 forms for the previous two years
- Your bank statements and investment account statements
Once you have gathered all of the necessary information, you can complete the FAFSA online or by mail. The online FAFSA is available at the Federal Student Aid website. The paper FAFSA is available at your child's high school or college financial aid office.
When you complete the FAFSA, be sure to indicate that you are applying for a Parent PLUS loan. You will also need to provide the name and school code of the college that your child will be attending.
Once you have completed the FAFSA, the information will be sent to the U.S. Department of Education. The Department of Education will then calculate your EFC and send you a Student Aid Report (SAR). The SAR will show you how much financial aid you are eligible to receive, including the amount of your Parent PLUS loan.
Apply online or by mail
Once you have received your Student Aid Report (SAR), you can apply for a Parent PLUS loan online or by mail. To apply online, you will need to visit the Federal Student Aid website and create an account. Once you have created an account, you will be able to access the Parent PLUS loan application. To apply by mail, you can download the Parent PLUS loan application from the Federal Student Aid website and mail it to the address provided on the application.
When you apply for a Parent PLUS loan, you will need to provide the following information:
- Your name and contact information
- Your child's name and Social Security number
- The name and school code of the college that your child will be attending
- Your financial information, including your income, assets, and expenses
You will also need to sign a promissory note, which is a legal document that promises to repay the loan. Once you have submitted your application, the lender will review your information and make a decision on your loan application. If you are approved for a Parent PLUS loan, the lender will send you a loan approval letter.
The loan approval letter will contain information about the amount of your loan, the interest rate, and the repayment terms. You will need to sign the loan approval letter and return it to the lender. Once you have signed the loan approval letter, the lender will disburse the loan funds directly to your child's school.
Applying for a Parent PLUS loan online is the fastest and easiest way to apply. However, you can also apply by mail if you prefer. Be sure to submit your application well in advance of the deadline, as it can take several weeks for the lender to process your application.
Provide financial info
When you apply for a Parent PLUS loan, you will need to provide the lender with your financial information. This information will be used to determine your creditworthiness and your ability to repay the loan.
- Income: You will need to provide the lender with information about your income, including your wages, salaries, tips, and self-employment income. You will also need to provide information about any other sources of income, such as Social Security benefits or child support payments.
- Assets: You will need to provide the lender with information about your assets, including your savings accounts, checking accounts, investments, and real estate. You will also need to provide information about any other assets, such as vehicles or boats.
- Debts: You will need to provide the lender with information about your debts, including your credit card balances, student loan balances, and other debts. You will also need to provide information about any other debts, such as mortgages or car loans.
- Credit history: You will need to provide the lender with information about your credit history, including your credit score and any history of late payments or bankruptcies.
The lender will use this information to assess your financial situation and determine your eligibility for a Parent PLUS loan. If you have a good credit history and a stable income, you are more likely to be approved for a Parent PLUS loan.
Sign promissory note
Once your Parent PLUS loan has been approved, you will need to sign a promissory note. A promissory note is a legal document that promises to repay the loan. The promissory note will include information about the amount of the loan, the interest rate, the repayment terms, and any fees that may be associated with the loan.
- Read the promissory note carefully before you sign it. Make sure that you understand all of the terms and conditions of the loan. If you have any questions, be sure to ask the lender.
- Sign the promissory note in the presence of a notary public. A notary public is a public official who is authorized to witness the signing of legal documents. You can find a notary public at your bank, credit union, or local courthouse.
- Return the signed promissory note to the lender. The lender will then process your loan and disburse the loan funds to your child's school.
- Keep a copy of the promissory note for your records. You may need to refer to the promissory note in the future, so it is important to keep it in a safe place.
By signing the promissory note, you are agreeing to repay the Parent PLUS loan according to the terms of the loan. If you fail to repay the loan, the lender may take legal action against you, including garnishing your wages or seizing your assets.
Complete loan counseling
Before you can receive a Parent PLUS loan, you are required to complete loan counseling. Loan counseling is a free service that provides information about the terms and conditions of the loan, as well as your rights and responsibilities as a borrower. Loan counseling is available online or in person at your child's school.
- Loan counseling covers a variety of topics, including:
- The different types of federal student loans
- The terms and conditions of the Parent PLUS loan
- Your rights and responsibilities as a borrower
- The repayment options available to you
- The consequences of defaulting on your loan
- You can complete loan counseling online or in person.
- To complete loan counseling online, visit the Federal Student Aid website.
- To complete loan counseling in person, contact your child's school's financial aid office.
- You will need to provide your Social Security number and your child's Social Security number to complete loan counseling.
- Once you have completed loan counseling, you will receive a certificate of completion. You will need to submit this certificate to the lender before you can receive your Parent PLUS loan.
Loan counseling is an important step in the process of applying for a Parent PLUS loan. By completing loan counseling, you can learn about your rights and responsibilities as a borrower and make informed decisions about your loan.
Receive loan funds
Once your Parent PLUS loan has been approved and you have completed loan counseling, the lender will disburse the loan funds to your child's school. The school will then credit the loan funds to your child's student account.
- The loan funds can be used to pay for any qualified educational expenses, including:
- Tuition and fees
- Room and board
- Books and supplies
- Transportation
- Other expenses related to your child's education
- Your child is responsible for managing the loan funds. They can use the funds to pay their bills online, by mail, or in person.
- Any loan funds that are not used to pay for qualified educational expenses will be refunded to you.
- You will receive a statement from the lender each month that shows the amount of your loan balance and the amount of interest that has accrued.
It is important to use the loan funds wisely and to make sure that your child is making satisfactory academic progress. If your child drops out of school or fails to maintain satisfactory academic progress, the lender may demand repayment of the loan in full.
Use funds for education expenses
The Parent PLUS loan funds can be used to pay for any qualified educational expenses. This includes:
- Tuition and fees: This includes the cost of instruction, registration, and other fees charged by the school.
- Room and board: This includes the cost of housing and meals on campus.
- Books and supplies: This includes the cost of textbooks, notebooks, and other materials required for classes.
- Transportation: This includes the cost of transportation to and from school, such as gas, bus fare, or parking fees.
- Other expenses related to your child's education: This includes the cost of computers, software, and other equipment that is necessary for your child's studies.
When you use the Parent PLUS loan funds to pay for qualified educational expenses, you are essentially prepaying for your child's education. This can help to reduce the amount of debt that your child has to take on after graduation.
Repay loan
You are responsible for repaying the Parent PLUS loan, even if your child does not complete their education or is unable to get a job after graduation. You will begin repaying the loan 6 months after your child graduates, leaves school, or drops below half-time enrollment. You can choose to repay the loan over a period of 10 years or up to 25 years if you meet certain requirements.
The interest rate on the Parent PLUS loan is fixed at 7.54%. You can make payments on the loan online, by mail, or by phone. You can also set up automatic payments from your bank account.
There are a number of repayment plans available for Parent PLUS loans. You can choose the repayment plan that best fits your budget and your financial situation. Some of the repayment plans available include:
- Standard Repayment Plan: This is the most common repayment plan. Under this plan, you will make fixed monthly payments over a period of 10 years.
- Graduated Repayment Plan: Under this plan, your monthly payments will start out low and gradually increase over time. This plan may be a good option if you have a limited budget.
- Extended Repayment Plan: This plan allows you to extend the repayment period to up to 25 years. This plan may be a good option if you have a high amount of debt or if you are struggling to make your monthly payments.
You can also apply for loan forgiveness if you meet certain requirements. For example, you may be eligible for loan forgiveness if you work in a public service job for 10 years or if you are unable to repay the loan due to a disability.
It is important to make your loan payments on time and in full. If you miss a payment or make a late payment, you may be charged a late fee. You may also be reported to the credit bureaus, which could damage your credit score.
FAQ
If you're a parent considering taking out a Parent PLUS loan, you may have some questions. 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 student loan that is available to parents of dependent undergraduate students. The loan is used to help pay for the student's education costs, such as tuition, fees, and room and board.
Question 2: Who is eligible for a Parent PLUS loan?
Answer 2: To be eligible for a Parent PLUS loan, you must be the parent of a dependent undergraduate student who is enrolled at least half-time in a degree program at an eligible school. You must also meet the general eligibility requirements for federal student loans, such as being a U.S. citizen or eligible non-citizen and not having a defaulted federal student loan.
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%.
Question 4: What is the repayment period for a Parent PLUS loan?
Answer 4: The repayment period for a Parent PLUS loan is up to 10 years. However, you may be eligible for an extended repayment period of up to 25 years if you meet certain requirements.
Question 5: How do I apply for a Parent PLUS loan?
Answer 5: To apply for a Parent PLUS loan, you must complete the Free Application for Federal Student Aid (FAFSA). You can also apply for a Parent PLUS loan online or by mail. Once you have applied, the lender will review your application and make a decision on your loan.
Question 6: What are the benefits of a Parent PLUS loan?
Answer 6: There are a number of benefits to taking out a Parent PLUS loan, including:
- The interest rate is fixed at 7.54%, which is lower than the interest rate on many private student loans.
- You can borrow up to the full cost of your child's education, minus any other financial aid that your child receives.
- You can choose from a variety of repayment plans, including a standard repayment plan, a graduated repayment plan, and an extended repayment plan.
Question 7: What are the drawbacks of a Parent PLUS loan?
Answer 7: There are also some drawbacks to taking out a Parent PLUS loan, including:
- You are responsible for repaying the loan, even if your child does not complete their education or is unable to get a job after graduation.
- The interest rate on a Parent PLUS loan is higher than the interest rate on federal student loans that are available to students.
- You may have to pay fees to apply for a Parent PLUS loan.
Closing Paragraph for FAQ: Ultimately, the decision of whether or not to take out a Parent PLUS loan is a personal one. You should carefully consider the benefits and drawbacks of the loan before making a decision.
If you do decide to apply for a Parent PLUS loan, there are a few things you can do to make the process easier:
Tips
If you're considering taking out a Parent PLUS loan, here are a few tips to help you make the process easier:
Tip 1: Apply early. The Parent PLUS loan application process can take several weeks, so it's important to apply early. This will give you plenty of time to gather the necessary documents and complete the application.
Tip 2: Gather the necessary documents. You will need to provide the lender with a number of documents, including your tax returns, W-2 forms, and proof of your child's enrollment in school. Make sure you have all of these documents gathered before you begin the application process.
Tip 3: Shop around for the best interest rate. Not all lenders offer the same interest rate on Parent PLUS loans. It's a good idea to shop around and compare interest rates from different lenders before you apply for a loan.
Tip 4: Make sure you understand the terms of the loan. Before you sign the promissory note, make sure you understand all of the terms of the loan, including the interest rate, the repayment period, and the fees that may be associated with the loan.
Closing Paragraph for Tips: By following these tips, you can make the Parent PLUS loan application process easier and ensure that you get the best possible interest rate on your loan.
If you have any questions about Parent PLUS loans, you can contact the Federal Student Aid Information Center at 1-800-433-3243.
Conclusion
Taking out a Parent PLUS loan is a big decision. It's important to carefully consider the benefits and drawbacks of the loan before you apply. If you do decide to apply for a Parent PLUS loan, there are a few things you can do to make the process easier, such as applying early, gathering the necessary documents, shopping around for the best interest rate, and making sure you understand the terms of the loan.
Closing Message: Ultimately, the decision of whether or not to take out a Parent PLUS loan is a personal one. There is no right or wrong answer. The best decision for you and your family will depend on your own financial situation and your goals for your child's education. If you have any questions about Parent PLUS loans, you can contact the Federal Student Aid Information Center at 1-800-433-3243.