Parent Loans

Author: Finance Editors

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FFEL Plus Loan: Parents can complete and submit an application which can be obtained at your financial aid office, your private lender or your state guaranteeing agency. There is a section of the application that must be filled out by the school before it can be submitted to the lender you have chosen. They will need to have an acceptable credit history to be approved.

If parents don’t pass the required credit check you can still receive a loan if a relative or friend can endorse the loan for you. Naturally that person then becomes responsible for paying your parent’s loan if anything should happen. Parents who failed to pass the credit check may still be eligible depending on the circumstance and whether or not they have a good reason. If this is the case, it becomes very important to know why they were not approved.

Loan amount: The amount parents receive is based on the cost for attending the school minus the amount of money already received for financial aid. For example, if the school costs $10,000 to attend and you’ve already received $3,000 in financial aid your parents could borrow up to $7,000.

Whomever the lender, they are responsible for sending your parent’s loan to your school. The school will first use the money to pay your school fees (tuition, lodging, etc.) then if there is money left the school will give it to you. In that case the money is to be given to you in two payments (one each semester).

Please note that all loans offered after July 1st 2006 have an interest rate of 7.94% for Direct Plus Loans and 8.5% for FFEL Plus Loans (prior to this date the rate was variable but couldn’t exceed 7.94% for 2006-2007). Banks cannot give you a loan with higher interest rates. Also remember there is usually a one time fee of 4% on the amount of the loan. It is taken directly from the loan.

Find here everything you need to know about Plus Loans.