is a student loan?
There are many different types of education loans. Learn about
federal and private education loans so that you can find the
right loan to help pay for your education.
Federal education loans
Federal programs are the single largest source of education
loans. The two primary programs are the Federal Family Education
Loan Program (FFELP) and the William D. Ford Federal Direct Loan
Program (FDLP). The loans available through these programs start
with the same terms; however, in the FFELP, your bank, credit
union, or school is the lender, and in the FDLP, the U.S.
Department of Education is the lender.
Listed below are some of the more widely used federal education
Federal Perkins Loans.
Federal Stafford Loans.
Federal Parent Loans for Undergraduate Students (PLUS).
Private education loans
Private education loans are not sponsored by government
agencies, and are offered by banks or other financial
institutions. These loans are also available from a variety of
sources to provide supplemental funding when other financial aid
does not cover costs.
Other private supplemental loans are available and in some cases
are tailored to specific courses of study. Some examples
Signature Student Loans
Types of federal student aid
PLUS LOANS (LOANS TO PARENTS)
What are PLUS Loans?
They’re loans you can take out to pay for your child's
education expenses if they are a dependent undergraduate student
enrolled at least half time. Also, you must have no adverse
Q) How should we apply?
For a Direct PLUS Loan, you must complete a Direct PLUS
Loan application and promissory note, contained in a single form
that you get from your school’s financial aid office.
are encouraged to have your dependent children file a FAFSA,
so they can receive the maximum student aid they’re
Q) Can we apply get both a Direct
PLUS Loan and a FFEL PLUS Loan for our child?
You can apply for either a Direct PLUS Loan or a FFEL PLUS
Loan, at a time. but not for both for your child during the same enrollment
period. However, you can apply for a Direct PLUS
Loan for one of your children and a FFEL PLUS Loan for another.
we need to find a lender?
Under the FFEL Program, you will need to find a participating
Not if you borrow under the Direct Loan Program, because their
lender will be the U.S. Department of Education. Your child's
assists the federal government in administering the Direct Loan
Program by distributing the loan application, processing the
loan, and disbursing the loan funds.
NOTE: Your child's school can refuse to certify your loan
application, or can certify a loan for an amount less than your
would otherwise be eligible for, The school’s decision is final and cannot be appealed
to the U.S. Department of Education.
Yes, generally you have to pass a credit
check. If you don’t pass, you might still be able to receive a
loan if someone, such as a relative or friend who can pass the
credit check, agrees to endorse the loan and promises to repay
it if you don’t. you must meet
citizenship requirements to be
Q) How much can my we borrow?
The yearly limit on a PLUS Loan is equal to your child's cost of
attendance minus any other financial aid he/she receive. For
example, if his/her cost of attendance is $6,000 and he/she receive
$4,000 in other financial aid, you could borrow up
to—but no more than—$2,000.
Q) Is it ever possible to postpone
repayment of a PLUS Loan?
Yes, under certain circumstances, you can receive a
deferment or forbearance on their loan, as long as the loan
isn’t in default. Generally, the conditions for eligibility and
procedures for requesting a deferment or forbearance that apply
to Stafford Loans also apply to PLUS Loans. However, since all
PLUS Loans are unsubsidized, you will be charged
interest during periods of deferment or forbearance. If you
don’t pay the interest as it accrues, it will be capitalized.
Q) Other than interest, is there a
charge to get a PLUS Loan?
You will pay a fee of up to 4 percent of the loan,
deducted proportionately each time a loan disbursement is made.
For a FFEL PLUS Loan, a portion of this fee goes to the federal
government, and a portion goes to the guaranty agency to help
reduce the cost of the loans. For a Direct PLUS Loan, the entire
fee goes to the government to help reduce the cost of the loans.
Also, if you don’t make your loan payments when
scheduled, you may be charged collection costs and late
Q) Do we get the money or my child?
Either the U.S. Department of Education (for a Direct PLUS Loan)
or your lender (for a FFEL PLUS Loan) will send the
loan funds to his/her school. Their school might require you to endorse a disbursement check and send it back to the
school. In most cases, the loan will be disbursed in at least
two installments, and no installment will be greater than half
the loan amount. The funds will first be applied to your
tuition, fees, room and board, and other school charges. If any
loan funds remain, you will receive the amount as a
check or in cash, unless they authorize the amount to be
released to you or to be put into your school account. Any
remaining loan funds must be used for their education expenses.
Q) What’s the interest rate on PLUS
The interest rate could change each year of repayment but does
not exceed 9 percent.
Q) When do we begin repaying a PLUS Loan?
There is no grace period for these loans
Generally, repayment must begin within 60 days after the final
loan disbursement for the period of enrollment for which you
borrowed. . This means
interest begins to accumulate at the time the first disbursement
is made. You must begin repaying both principal and
interest while your child is still in school.
Q) How do my parents pay back the loan?
For Direct PLUS Loans, you can choose the Standard,
Extended, or Graduated Repayment Plan.
For FFEL PLUS Loans, you can usually choose the Standard,
Extended, Graduated, or Income Sensitive Plan. FFEL PLUS Loans
can also be consolidated.
Q) Can a PLUS Loan be discharged
Yes, under certain conditions. A discharge releases you
from all obligation to repay the loan.
Student loan consolidation programs allow for a borrower's loans
to be paid off and a new consolidated loan created.
These programs simply loan repayment by combining several types
of Federal education loans into one new loan. The interest rate
may be lower than on one or more of the underlying loans.