How Do the PLUS Loans Work?

As the cost of education rises, the need to subsidize the education also rises, along with students, now parents can also now take the loan in order to help their children with various college expenses. Know about the PLUS loans to realize your dream of studying in the college of your choice.


The whooping rise in the fees and price of college has given rise to many such loans. PLUS loan is one of that. PLUS loans are offered to the parent of the student enrolled in any course halftime.

PLUS loans are an attractive package for the parents of students going to college, unlike private loans PLUS loans has relatively low interest and carries a fixed rate of interest throughout the life of the loan and. Also PLUS loans for bad credit do not need an immediate payment. The repayment has to be done once the student the student completes his education and attains his degree or he leaves the college after at least halftime. As such, there is no minimum amount for PLUS loans, but there is limit for the maximum amount that is could be borrowed. The amount of PLUS loans cannot exceed the total cost of college expenses after deducting the financial aid that has already been provided

QUALIFYING FOR PLUS LOANS: Unlike other federal loans, qualifying for PLUS loan will only need your stable credit position. As PLUS loans are not the need based loans they are the credit based loans, therefore they require the credit check before granting your loan. You need not worry about your adverse credit history as it will not ruin your loan, you might have a few late payments in the past but you cannot have any major default. If your credit history is a problem, you can talk to your lender and discuss about various other alternative payment plans or see if you can negotiate the settlement with any of your creditors.

However if you think your credit history is not in shape and the loan would not be granted to you, there is another option as well. For that, you need to search for a person with a good credit background and that person has to act as a co-signer, which means that person also takes responsibility for the payment of your unsecured loans on time. However, if you have good credit history, your path is smooth and you are good to go!

TERMS Of PLUS LOAN: Once you are qualified for the PLUS loan you will receive the payment of money in two installments. The amount of PLUS is generally paid by the bank to the college directly. Money from PLUS loans cover the remaining expenses of housing and boarding, college expenses, tuition fees and more. All the expenses, which are remaining unpaid, are paid by the PLUS loans. After making all the payments it is up to the parent whether he wants to hold money in the bank account or he wants to transfer the money to the student’s account for his/ her personal expenditure. The rate of interest of the PLUS loan is fixed at the rate 7.9%. Unlike other subsidized Federal loans, the interest starts accruing from the very day the loan is discharged. However, you do not have to pay it immediately you can wait for the 60 days until after the full amount of the loan is disbursed. If you do not pay the interest upon your PLUS loan that keeps on accruing and the accrued amount gets on adding in to your balance amount of the loan increasing the balance of the loan.

Like any Federal program the PLUS loans also has complicated procedure and confusing terminology. However, all you have to do is to walk through the eligibility criteria, fill up the application form and apply for the loan in order to shape up your future.

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