Susan Kelly
Aug 26, 2022
A PLUS loan, sometimes known as a direct PLUS loan, is a type of federal student loan available to the parents of undergraduates, graduates, and professionals.
Plus Loan for First-Time College Borrowers 1 PLUS loans, like federal student loans, are made accessible through the William D. Ford Federal Direct Loan Program of the United States Department of Education. Direct loans are, well, loans that come straight from the government.
If a dependent student is enrolled at least half-time at a school participating in the Federal Direct Loan Program, a parent may apply for a PLUS loan on the student's behalf.
First, the school gets the PLUS loan money, and THEN it pays for things like tuition, room and board, fees, etc. Any surplus is given directly to the student or parent. PLUS, loans do not have a variable rate of interest. For loans disbursed between July 1, 2021, and June 30, 2022, the rate is 6.28%.
During the economic crisis of 2020, principal and interest payments on federal student loans were temporarily discontinued. Your principal and interest loan payments will commence on September 1, 2022.
A FAFSA is required for PLUS loan applicants, including students and parents (FAFSA). It is also necessary that the parent's credit is adequate. Anyone enrolled full-time in a graduate or professional degree program at an eligible school is eligible to apply for a PLUS loan as an independent student. To distinguish them from "parent PLUS loans," these are often referred to as "grad PLUS loans."
To qualify for a parent PLUS loan, the student must be financially dependent on the parent (biological or adoptive) or stepparent (or grandparent). To be eligible for financial help, the student and their parents must meet the standard requirements, such as being U.S. citizens or permanent residents and having no negative credit histories. A loan may be granted to borrowers with poor credit if they demonstrate exceptional circumstances or obtain a cosigner. Those whose parents don't qualify for a PLUS loan may still be eligible to receive other, higher-limit student loans.
There are many positives to getting a PLUS loan. A parent can get a loan for their child's undergraduate education up to the total cost of attendance, less any other financial aid the student obtains. That is everything from tuition to housing to food to books. In addition, there is no proof of financial need prerequisite for receiving this loan.
Further, the PLUS loan interest rate is a fixed percentage. A fixed-rate loan has an interest rate that remains constant until the loan is repaid. Market fluctuations will not affect the interest rate. The interest rates on PLUS loans are lower than average, but they are still much higher than those on student loans.
Pros
Cons
Another potential downside of PLUS loans is that a parent's credit history may be reviewed. Your credit report should be clean if you wish to apply, although excellent credit is not mandatory. A cosigner might increase your chances of getting a loan, even if you have poor credit. The amount you receive is reduced by an administration charge assessed by the federal government and deducted from each installment of your PLUS loan. All loans disbursed between October 1, 2020, and September 30, 2022, will incur interest at a rate of 4.228%.
The first PLUS loan payment is often required as soon as the loan is paid in full. Repaying student loans or requesting a deferment are options while a student is still in school. If the deferral is approved, the borrower won't have to make any loan payments. At the same time, they're enrolled at least half-time in school, and they won't have to make any payments again until six months after they graduate, drop below half-time enrollment, or drop out of school entirely. However, interest will continue to accrue and be applied to the loan balance.
How Mutual Funds Are Taxed By Capital Gains in the United States
The 1040 tax form can be intimidating if you own mutual funds that aren't in a tax-free account. The forms can occasionally contain an alarming number of calculations and rules. However, there are other ways to make your investments in mutual funds tax-efficient.
How Does Debt Signaling Work?
A stock's future performance is correlated with any recent disclosures made on the company's debt, according to one financial theory known as "debt signaling." It is typically considered good news when a corporation announces the incurring of debt since this might indicate that the firm is creditworthy and is seeking to raise funds for expansion.
All You Need To Know About Exchange-Traded Fund (ETF)?
An ETF is a collection of assets that trades on an exchange like a stock. Unlike mutual funds, that only trade once a day, after the market closes, ETF share values vary throughout the day as the ETF is purchased and sold. Some ETFs solely hold U.S. equities, commodities, or bonds, while others invest globally. Compared to purchasing the stocks separately, ETFs have lower cost ratios and broker charges.
DCF in Real Estate Valuation
In assessing real property investments, it is recommended to use the DCF method, a valuation method used to determine how much an investment is worth based on the property's cash flow forecast typically. In a DCF analysis, the primary aspects to consider are the beginning cost, the annual cost, expected revenue, and the holding period of the property.
Privacy Policy | Terms of Use
Copyright © 2021.All rights Reserved.
Contact us at : [email protected]
