PLUS Loan Rates

Parent PLUS loan rates may be of interest to you when looking into PLUS loans. While you can use such funds to borrow up to the cost of an education, the idea is to borrow as little as you have to. By finding out if you are eligible for grants, scholarships, and work study first, you will have an idea of how much still has to be covered.

Federal Parent PLUS Loan Rates and You

The Federal Parent PLUS loan is for undergraduate students. It allows parents that have a good credit history to get a loan to pay for the education of a child that is enrolled at least part time. The direct PLUS loan interest rate amount will be fixed – so it isn’t determined by the credit score of the parents.

However, eligibility can be approved or denied based on the overall credit of the parents. Should a parent be deemed to have credit that isn’t acceptable, there is one other option. That would be to have a co-signer on the loan as well. This is someone that does have good credit and willing to cosign.

They would be vouching for the parents to make good on the funds that they need to repay. Should the parents not do so for any reason, it is the co-signer that legally becomes obligated to pay them.

As of July 1, 2010, the current PLUS loan interest rates were 7.9%. However, that amount can be reduced by .25% per month. The way to take advantage of that reduction is for the parents to set up an automatic debit payment from a bank account of their choice.

Don’t worry if you didn’t prepare early either for such a need. Some students don’t realize until it is crunch time that they simply don’t have enough money ready to pay for the upcoming college semester. Funds from PLUS loans can often be disbursed within a few weeks of the application process.

It is a good idea to discuss the Parent PLUS loan rates, the cost of the education, and other information with someone in financial aid. Once your child knows the college where they will attend, schedule an appointment. You may also find that there are additional funds for college that you didn’t know about.

Any time you get such information, it is encouraging and should be followed up on. The more free money you can get for your child’s education, then the less you have to borrow through the PLUS loan program. It makes sense to keep that debt as low as you can.

Of course the parents must sign the promissory note before hand. This means that they agree to the payment terms and conditions. They agree to pay the principal amount plus the interest. They also agree to pay in monthly installments, even if their child doesn’t complete their education.

To help reduce the overall amount of interest that will be paid, it is a good idea to pay off the PLUS loan as soon as possible. There isn’t any type of penalty should you pay off the loan early. If you find that the monthly payments are tough, consider consolidation. This is also something to look at in the future if the PLUS loan interest rates on such loans drop below what you have them currently at.

When it comes to PLUS loan rates, it is important to note that you may be able to deduct the amount of interest paid. This would be part of the Hope Education Tax Credit. It is a good idea to consult with your tax preparer to see if you qualify for this particular credit. Not everyone is able to put aside enough money for their children to go to college.

Yet they may be making too much money according to the FAFSA for their child to get a Pell Grant. Such individuals shouldn’t fall through the cracks and not be able to go to college. The Parent PLUS loan rates are low and designed to help ensure that just about everyone can go to college if they really want to.