Determine your initial eligibility for a federal parent plus loan before you apply. The parent that's applying for the federal plus loan must have an acceptable credit history. PLUS Loans are available to parents of dependent, undergraduate students. An eligible federal loan borrower is a dependent student's natural or adoptive mother or father. The applicant must be a U.S. Citizen, U.S. national or eligible non-citizen to qualify. Eligibility for parent PLUS Loan is not based on need or income, but the student must be enrolled at least on a half-time basis to qualify for a parent PLUS loan.
Complete a parent plus loan application and promissory note, contained in a single form that you get from the schools financial aid office. After the school completes its portion of the application for a federal plus loan, it must be sent to a lender for evaluation. It can take up to one month or longer to receive a response.
Get a credit check when applying for a federal plus loan. Parents generally will be required to pass a credit check to be eligible for a parent plus loan. If the parent doesn't pass the credit check, they might still be able to receive the plus loan if a trusted relative or friend can pass the credit check and co-sign for the parent plus loan. A co-signer promises to repay the loan if the parent fails to do so. Parents must also meet other general eligibility requirements for federal student financial aid.
Determine how much money can be borrowed for the parent plus loan. The yearly limit on a plus loan is equal to your cost of attendance minus any other financial aid you receive. If your cost of attendance is $6,000, for example, and you receive $4,000 in other financial aid, parents can borrow up to $2,000.
Once approved for a federal plus loan, prepare to pay a fee. You will have to pay a fee of up to 4% of the plus loan, deducted proportionately each time a loan disbursement is made. A portion of this fee goes to the federal government, and a portion goes to the guaranty agency (the organization that administers the PLUS Loan Program in your state) to help reduce the cost of the federal loans. Also, there may be charges for collection costs and late fees if the plus loan payments are not paid on time.
Begin making payments for the loan according to the payment schedule. 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 parent PLUS loan either 60 days after the loan is fully disbursed or wait until six months after the student ceases to be enrolled on at least a half-time basis. Some parent plus loans can be repaid to a private lender or loan servicer.
Get a deferment on the pareent plus loan if payments temporarily cannot be made due to an unfortunate financial crisis. In some cases, you can also receive forbearance on the loan if payments cannot be met. During forbearance, payments are postponed or reduced. You will be charged interest during periods of deferment or forbearance. If interest is not paid as it accrues, it will be added to the principal amount of the loan and additional interest will be charged on that higher loan amount.