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PLUS Loan

From Wikipedia, in a visual modern way
Student loans in the U.S.
Regulatory framework
Higher Education Act of 1965
U.S. Dept. of Education · FAFSA
Cost of attendance · Expected Family Contribution
Distribution channels
Federal Direct Student Loan Program
Federal Family Education Loan Program
Loan products
Perkins · Stafford
PLUS · Consolidation Loans
Private student loans

A PLUS Loan is a student loan, which is part of the Federal Direct Student Loan Program, offered to parents of students enrolled at least half time, or graduate and professional students, at participating and eligible post-secondary institutions. The original, now obsolete, meaning of the acronym was "Parent Loan for Undergraduate Students".

Discover more about PLUS Loan related topics

Student loan

Student loan

A student loan is a type of loan designed to help students pay for post-secondary education and the associated fees, such as tuition, books and supplies, and living expenses. It may differ from other types of loans in the fact that the interest rate may be substantially lower and the repayment schedule may be deferred while the student is still in school. It also differs in many countries in the strict laws regulating renegotiating and bankruptcy. This article highlights the differences of the student loan system in several major countries.

Federal Direct Student Loan Program

Federal Direct Student Loan Program

The William D. Ford Federal Direct Loan Program provides "low-interest loans for students and parents to help pay for the cost of a student's education after high school. The lender is the U.S. Department of Education ... rather than a bank or other financial institution." It is the largest single source of federal financial aid for students and their parents pursuing post-secondary education and for many it is the first financial obligation they incur, leaving them with debt to be paid over a period of time that can be a decade or more as the average student takes 19.4 years. The program is named after William D. Ford, a former member of the U.S. House of Representatives from Michigan.

Higher education

Higher education

Higher education is tertiary education leading to the award of an academic degree. Higher education, also called post-secondary education, third-level or tertiary education, is an optional final stage of formal learning that occurs after completion of secondary education. It represents levels 5, 6, 7, and 8 of the 2011 version of the International Standard Classification of Education structure. Tertiary education at a nondegree level is sometimes referred to as further education or continuing education as distinct from higher education.

Acronym

Acronym

An acronym is a word or name consisting of parts of the full name's words. Acronyms are usually formed from the initial letters of words, as in NATO, but sometimes use syllables, as in Benelux, NAPOCOR, and TRANSCO. They can also be a mixture, as in radar and MIDAS.

Similarities with Stafford and Perkins loans

PLUS loans share some similarities with the Stafford and Perkins loans offered to students:

Discover more about Similarities with Stafford and Perkins loans related topics

Stafford Loan

Stafford Loan

A Stafford Loan was a student loan offered from the United States Department of Education to eligible students enrolled in accredited American institutions of higher education to help finance their education. The terms of the loans are described in Title IV of the Higher Education Act of 1965, which guarantees repayment to the lender if a student defaults. As of July 1, 2010, Stafford Loans are no longer being offered, having been replaced with the William D. Ford Federal Direct Student Loan Program.

Federal Perkins Loan

Federal Perkins Loan

A Federal Perkins Loan, or Perkins Loan, was a need-based student loan part of the Federal Direct Student Loan Program, offered by the U.S. Department of Education to assist American college students in funding their post-secondary education. The program was named after Carl D. Perkins, a former member of the U.S. House of Representatives from Kentucky.

Higher Education Act of 1965

Higher Education Act of 1965

The Higher Education Act of 1965 (HEA) was legislation signed into United States law on November 8, 1965, as part of President Lyndon Johnson's Great Society domestic agenda. Johnson chose Texas State University, his alma mater, as the signing site. The law was intended "to strengthen the educational resources of our colleges and universities and to provide financial assistance for students in postsecondary and higher education". It increased federal money given to universities, created scholarships, gave low-interest loans for students, and established a National Teachers Corps. The "financial assistance for students" is covered in Title IV of the HEA.

Federal student loan consolidation

Federal student loan consolidation

In the United States, the Federal Direct Student Loan Program (FDLP) includes consolidation loans that allow students to consolidate Stafford Loans, PLUS Loans, and Federal Perkins Loans into one single debt. This results in reduced monthly repayments and a longer term for the loan. Unlike the other loans, consolidation loans have a fixed interest rate for the life of the loan.

Differences from Stafford and Perkins loans

  • There are no limits on the amount borrowed up to the cost of attendance minus other financial aid. Living expenses are considered part of the cost of attendance.
  • The repayment schedule for Direct PLUS Loans disbursed on or after July 1, 2008 is the same as the schedule for Stafford loans.[1][2] However, for Direct PLUS Loans first disbursed before July 1, 2008, the repayment period begins at the time the PLUS loan is fully disbursed, and the first payment is due within 60 days after the final disbursement. Repayment may be deferred while at least a half-time student; however, the unpaid interest is added to the principal.
  • The interest rate is currently fixed at 6.28% and charged from the date of the first disbursement until the loan is paid in full.
  • For undergraduate students, the loan is a commitment by the parent, rather than the student.
  • Several different repayment plans are available.
  • Credit history is taken into account, while with Stafford loans it is not.
  • Do not have the postponement and discharge (cancellation) options available with Stafford loans.

Changes as of July 1, 2006

Like the Stafford Loan program, the PLUS program changed to a higher, but fixed rate, structure for loans disbursed after midnight, July 1, 2006. The rate offered through the Direct Loan Program was 7.9%. Additionally, the PLUS program was made available for graduate and professional students to borrow to finance their own educations, commonly referred to as the Grad PLUS loan.

Changes as of July 1, 2008

For PLUS loans made to parents that are first disbursed on or after July 1, 2008, the borrower has the option of beginning repayment on the PLUS loan either 60 days after the loan is fully disbursed or wait until six months after the dependent student on whose behalf the parent borrowed ceases to be enrolled on at least a half-time basis.

Source: "PLUS Loan", Wikipedia, Wikimedia Foundation, (2022, August 2nd), https://en.wikipedia.org/wiki/PLUS_Loan.

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Further Reading

National Defense Education Act

Debt consolidation

Student loan

Student loans in the United States

Bipartisan Student Loan Certainty Act of 2013
References
  1. ^ "Direct PLUS Loans for Graduate and Professional Degree Students". Federal Student Aid. Archived from the original on 2011-08-07.
  2. ^ "Plus loans". arapahoe.edu. Archived from the original on 27 October 2015. Retrieved 29 October 2015.
External links
  1. ^ https://studentaid.gov/understand-aid/types/loans/plus
  2. ^ a b https://studentaid.gov/understand-aid/types/loans/subsidized-unsubsidized
  3. ^ https://studentaid.gov/manage-loans/consolidation
  4. ^ a b https://www.mohela.com/DL/resourceCenter/glossary.aspx
  5. ^ a b https://studentaid.gov/help-center/answers/article/ffel-program
  6. ^ https://fsapartners.ed.gov/knowledge-center/topics/health-education-assistance-loan-heal-information
  7. ^ a b https://studentaid.gov/help-center/answers/article/stafford-loan
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