Student PLUS Loans
PLUS Loans are loans taken out by your parents to pay for your college education. Your parents can only receive PLUS Loans if you are a dependent undergraduate and enrolled at least half-time. PLUS Loans use the same funding as the loans mentioned earlier, meaning that your parents must choose between Direct Loan funding or FFEL funding. Your parents have to also pass a credit check to get a PLUS loan.
PLUS Loans have also recently been added for graduate and professional degree students. Despite their name, these loans use your credit score instead of your parents’ to determine whether or not you are eligible to receive the loan. These loans use Direct Loan or FFEL funding just like the other loans, but they have a tendency to have higher interest rates.
The parents of students opting for higher education take the Plus Loans. These loans are taken to supplement the income of students. It meets the various necessities of funds to finance the aspects other than their fees of college education. To elaborate, the plus loans are used to finance boarding, lodging, books, tuition fees and so on. Plus loans are also used for financing any unexpected expenditure incurred in education.
PLUS loans can be consolidated; it’s just that they cannot be consolidated along with student debt under certain circumstances.
The nature of PLUS loans is different from the rest of student loans and thus there are some obstacles for achieving student debt consolidation and including these loans on the package. Though there may not be economical reasons for this, the source of this difficulty is legal and has to do with who is the real holder of the loan. This problem, however, can be overcome by other means.
Nature of PLUS loans and Obstacles for Joint Consolidation
PLUS loans are meant for providing finance for the parents of students so they can aid their children pay for their college studies. Thus, the obligation of repayment is not the student’s burden but the parents’. PLUS loans constitute a personal loan contract with three parties: the lender (financial institution), the taker or borrower (the student’s parents) and the final beneficiary of the loan (the student).
Thus, legally speaking, the ones obliged to repay the loan are the actual takers, the parents. And since consolidation of federal student loans implies replacing all the debts for which the student is obliged with a single loan, PLUS loans are left out due to being a parents’ debt and not a student’s debt. However, this doesn’t imply that PLUS loans cannot be consolidated as there are other means to fulfill that purpose.
Graduate PLUS Loan
Graduate PLUS loans are offered at rates beginning as low as 8.5 percent and provide all the additional perks of PLUS loans but are issued directly to the graduate or professional student. Graduate PLUS loans are eligible for federal student loan consolidation, tax-deductible interest, flexible repayment options and the freedom of post-graduation loan repayment.
Federal Education Services offers benefits and incentives with its Graduate PLUS loans that help make it easier to attain the goals of a graduate degree. A 2 percent rate reduction is offered after student borrowers make their first 48 months of on-time consecutive payments. And when choosing repayment through Auto-Debit, student borrowers receive a .25 percent rate reduction.
To be eligible for a Graduate PLUS loan, students must be a U.S. citizen or an eligible noncitizen. Graduate PLUS loans offer several repayment options including deferred repayment while students are enrolled in school at least half time. There never are any prepayment penalties. Federal Education Services makes a graduate degree more available to student borrowers who wish to take their higher education to the next level.
