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".
