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FEDERAL PLUS LOAN FOR PARENTS
Parent Loan for Undergraduate Students.
Parents can apply for a Federal Plus Loan covering the entire expense (tuition, administrative fees, books and material, accommodation and meals, transportation) for their son or daughter’s first university study. Any other government financial aid will be discounted from the sum granted. This is a federal government-guaranteed loan and it helps parents to cover their children’s studies with a low interest rate. There’s no need to prove a situation of economic need, but the university selected may ask the student to apply for a federal loan in order to accept the student enrolment admission in the university. Parents need a good credit history and it will be checked that they haven’t unfulfilled repayment of other loans the past.
For a Direct PLUS Loan, your parents must complete a
Direct PLUS Loan application and promissory note,
contained in a single form that you will get from your
school’s financial aid office.
For a FFEL PLUS Loan, your parents must complete
and submit a PLUS Loan application, available from
your school, lender, or your state guaranty agency.
After the school completes its portion of the application,
it must be sent to a lender for evaluation.
Although it’s not a requirement, parents are encouraged
to have their dependent children file a FAFSA, so
their children can receive the maximum student aid
they’re eligible for.
Interest rates and charges:
• Interest rates are variable but they can’t reach over 9 %. Rates are reviewed on July 1st every year.
• The federal government will apply an initial charge of 3 % and the lender granting the loan may charge up to 1 %.
• Both charges will be automatically deducted from the sum actually transferred to the borrower.
Repayment:
• You start repaying 60 days after the loan has been obtained. Paid interests may qualify for tax benefits.
• Usually people choose a fixed monthly instalment, the minimum being USD 50.00.
• Loans can be issued by financial institutions or directly by the government (direct loan program).
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