A Parent PLUS Loan is a type of federal student loan that is available to parents of dependent undergraduate students. This loan allows parents to borrow money to help pay for their child’s education, and it is an option for families who have exhausted other forms of financial aid.
The Parent PLUS Loan is offered by the Department of Education and is available to parents who are U.S. citizens or permanent residents. To be eligible, parents must have a good credit history and must not have any adverse credit history, such as a bankruptcy or foreclosure.
One of the key features of the Parent PLUS Loan is that it has a fixed interest rate. The current interest rate for the 2021-2022 academic year is 5.30%. This rate is set by the Department of Education and may change from year to year.
Another important feature of the Parent PLUS Loan is that it has a loan fee. This fee is a percentage of the loan amount that is deducted from the loan disbursement. For loans disbursed between October 1, 2021 and October 1, 2022, the loan fee is 4.236%.
Parents who are considering a Parent PLUS Loan should be aware that this type of loan is not eligible for certain federal repayment plans, such as income-driven repayment or Public Service Loan Forgiveness. Additionally, the loan may have a higher interest rate than other federal student loans.
However, the Parent PLUS Loan does offer some benefits, such as the ability for parents to borrow as much as the full cost of their child’s education (minus any other financial aid received). Additionally, the loan offers a flexible repayment schedule and the option to postpone payments while the student is in school.
In summary, a Parent PLUS Loan is a federal student loan that is available to parents of dependent undergraduate students. It offers a fixed interest rate and the ability to borrow up to the full cost of their child’s education, but it is not eligible for certain federal repayment plans and may have a higher interest rate than other federal student loans.