PARENT PLUS LOANS
The Parent Plus Loan is created for all parents who want to help their children acquire better education. It is provided by the Federal Family Education Loan Program and its addressed to parents whose children attend at least half-time college or career school.
General information about Parent Plus Loans
The interest rate
The Parent Plus Loan is a low-interest loan with a fixed interest rate of 8,5%. It is being adjusted each July 1st on a basis of a margin (determined by your lender) and the 90-day Treasury bill but the rate will never be higher than 9.0%.Some of the lenders offer even the additional rate reductions.
There are no loan limits and income requirements . You can borrow as much money as needed to cover the full cost of the education including funds for books, tuition, room , alimentation etc.
Its 4% of the borrowed amount and it contains:
- 1%-Federal default fee
- 3%-Federal origination fee
Parent Loan main benefits
Among other benefits of taking a parent plus loan, the most significant include:
- Loans consolidation
- Possibility to defer the loan
- Flexible repayment programs
What happens to the money?
The money comes directly to the schools. First are paid all costs of studying like tuition, books etc. The money that remains after all charges may be received to you or if you will agree the money will be available to your child or stay in a school account.
The Parent Plus Loans offer several programs of the repayment:
- Level. You will pay fixed monthly amount of money.
- Graduated. You will pay small amount of money at the beginning and it will increase during the repayment period.
- Income Sensitive. The monthly payments are based on the gross income.
The repayment period is 10 years but you may repay it earlier. Its called prepayment and its not penalized .The repayment starts 60 days after the schools receive the funds.
There are several requirements that you have to meet , both from the parents side and the children perspective.
- The parents:
- Have to be creditworthy and a US citizen (or eligible non-citizen)
- Have no default loans
- Have to be the natural or adoptive parents of their children. Some times the stepparents may also apply for The Parent Loan
- The children:
- Must be dependent on their parents. This is a necessary requirement. If your children are independent you will not get the loan
- Belong to FAFSA
- The school has to participate in the Federal Family Education Loan Program
- Have to be at least half-time students at college or career school
- Have no default loans
- Have no educational grant refunds
One of the most important thing that you have to remember is that your child has to be a dependent student.
You won't get The Parent Plus Loan for the year 2009/2010 if your child was born before January 1 , 1986 if she/he:
- is married or separated (but not divorced)
- enrolls in masters or doctorate program
- receives at least half support from you or has dependents who received from him/her more than half of their support until June30 , 2010
- serves actively in the Armed Force or is a veteran , is/was in ward or dependent of the court until 18 years old.
How to get the Parent Plus AES Loan?
- Fill the Free Application for Federal Student Aid (FAFSA).This is necessary because without it you will be not eligible for any kinds of students aid. After that you will receive a Student Aid Report-SAR(it tells what kinds of federal funding your child can get)and student aid award letters from all schools.
- Compare all propositions and check whether it meets the requirements of your children educations. If it doesn't, there is a possibility to apply the Expected Family Contribution indicated in SAR.
- Sign the MPN(“promise to pay”) which is necessary.
The American Education Service (AES) offers two programs of the Parent Plus Loans. First is a standard Parent Plus Loan. The second one is created for parents whose children go to school in Pennsylvania and its called The KeystoneBEST AES Loan. If you will choose the AES as your lender there will be waiting for you many attractive options in the Parent Plus Loan like: reduction of the interest rate, online access to the loan anytime it is needed , single-point servicing and any kinds of help if there is such need.