Graduate students and non-dependent undergraduates may also apply for federal, state, and institutional financial aid.
PLUS Parent Loans
In many cases, a financial aid package may not be enough to cover what your school expects you and your family to pay for college, even when combined with any scholarships and savings you’re bringing to the table.
If you’re an undergraduate and a dependent of your parents, and if your parents are willing to help you pay for college, they may be able to take out a federal parent loan — known as a PLUS loan — that can be used to pay for the cost of attending college.
PLUS parent loans are available in loan amounts that cover up to 100 percent of your certified cost of attendance.
PLUS Graduate Student Loans
PLUS loans, however, are no longer just for parents and their dependent undergraduates.
Beginning in 2006, the federal government opened up the PLUS program to graduate students as well. PLUS graduate student loans, known as Grad PLUS loans, can be used, like PLUS parent loans, to pay up to 100 percent of your certified cost of attendance.
Under federal rules, graduate students are automatically regarded as non-dependents and are thus ineligible for PLUS parent loans, which are only available to parents of undergraduates.
Grad PLUS loans offer graduate students an additional college financing option to scholarships, grants, fellowships, and federal Stafford graduate student loans.
PLUS Loan Eligibility
Eligibility for PLUS parent loans and graduate loans is determined, in part, by the information you submit on the FAFSA, the Free Application for Federal Student Aid. All students, both graduate and undergraduate, who are looking for federal financial aid for school must complete a FAFSA each year.
PLUS and Grad PLUS loans, unlike federal Perkins college loans and federal Stafford student loans, are credit-based loans that require a modest credit check.
In order to meet PLUS credit requirements, parent and graduate student applicants must be free of serious adverse credit items, such as a recent foreclosure or bankruptcy, significant delinquencies (defined as 90 days or more) on credit accounts, or a default on another federal parent or student loan.
Undergraduate students whose parents fail to qualify for a PLUS loan are eligible to receive additional money in federal student loans to help meet their expected family contribution to their college costs.
PLUS Loan Interest Rates
Loans made through the federal PLUS program allow you to borrow money for college at a fixed interest rate.
PLUS loans, both for parents and graduate students, currently carry a fixed interest rate of 7.9 percent. For graduate students looking at their graduate loan options, this rate is slightly higher than the fixed 6.8-percent rate available on federal Stafford graduate student loans.
PLUS and Grad PLUS loans are also subject to a 4-percent servicing fee, which is deducted from the loan proceeds at the time the loan is issued.