PLUS Loans

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While most parents would love to pay for their children’s college education, most parents today simply have not been able to save enough money to pay for that ever-increasing tuition. However, there is a way for parents to pay for their child’s education. That way is the PLUS loans program.

PLUS Loans Basics

PLUS loans are handled by the government. The program was established to provide parents and students with an alternative method of paying for college education. While Stafford loans are given to students, PLUS loans are only for parents. Therefore, the parents, not the student, are financially responsible for paying back the loan.

Differences Between PLUS Loans and Stafford Loans

There are a number of differences between these two types of student loan programs.

First, not everyone is eligible to receive a PLUS loan, however. Parents must pass a credit check before they are approved. For students who come from families with a poor credit history, they may be better off trying for Stafford loans.

Second, PLUS loans do not have pre-established borrowing limits. The only limit is that the loan’s maximum amount is the cost of the yearly tuition minus any other financial aid. If the tuition for one year is $20,000 and the student is receiving $5,000 in other aid, then the parents can borrow up to $15,000.

Third, while Stafford loan repayment begins six months after a student graduates, PLUS loans must be repaid sooner. Sixty days after the loan is completely disbursed, parents must begin repaying the loan. The minimum monthly payment is $50.

Fourth, after a Stafford loan is disbursed the student receives any money that remains after the tuition and fees are paid for. With the PLUS loans, the excess money goes directly to the parents unless they specify differently.

References and Links

To learn more about PLUS loans, visit the “Parent PLUS Loan” at the US governments financial aid website.

Students and their parents can also learn about other types of financial aid by reading “Stafford Loans” or “Private Student Loans“.