What is a Federal PLUS Loan?

You have always wanted the best for your child and it was a promise you made to pay for your daughter’s education. Well the time is right around the corner and you are just beginning to research all the options out there to help get the financial resources organized. A Federal PLUS Loan may be just the ticket you need to pay for your offspring’s higher education.

The Federal Parent PLUS Loan provides parents and guardians with the opportunity to borrow money at a low rate to help pay for their kid’s education. Only those with a good credit with a child attending an accredited American University plus with at least a half time enrollment status can apply to the program.

Federal PLUS Loans have low, fixed interest rates and are federally guaranteed. The amount to be borrowed can include all expenses such us tuition, room and board, and any other eligible school expenses. All a parent needs to apply is a good credit history. This loan requires no collateral to gain approval and the fixed rate interest (set at 8.5% since July, 2006) may be tax deductible.

Not only can undergrads take advantage of this program, but there is also a Graduate PLUS Loan for Grad Students. Graduate students can borrow this money directly and take advantage of the fixed interest rate, possible tax deduction and the backing federal guarantee.

Those wanting to take advantage of a Federal PLUS Loan to finance their tuition costs, need to fill out applications and submit them properly as well as possibly fill out some additional paperwork. Since this is a federal program, it may be required by the university that a FAFSA (Free Application for Financial Student Aid) be completed. The FAFSA may need to be “certified” (approved) by the college or university’s financial aid office.