Here are some key points about the Federal Direct PLUS Loan:

Eligibility: To be eligible for a Parent PLUS Loan, the borrower must be the biological or adoptive parent of a dependent undergraduate student who is enrolled at least half-time in an eligible program at a participating school. The borrower must also meet certain credit requirements.

Credit Check: The Department of Education performs a credit check to determine the borrower’s eligibility for the loan. Adverse credit history, such as delinquencies, bankruptcies, or loan defaults, may affect the borrower’s ability to qualify. However, there are options available for borrowers with adverse credit history, such as obtaining an endorser or appealing the credit decision.

Loan Limits: The maximum loan amount a parent can borrow is determined by the cost of attendance at the school minus any other financial aid received by the student. There are no set annual or aggregate limits for Parent PLUS Loans, but the loan amount cannot exceed the student’s cost of attendance.

Interest Rate and Fees: The interest rate on Parent PLUS Loans is fixed for the life of the loan. The rate is set annually by the Department of Education. There is also an origination fee, which is a percentage of the loan amount and is deducted from each loan disbursement.

Repayment: Parent PLUS Loans typically have a repayment period of 10 years, but borrowers may be eligible for certain repayment plans, such as income-contingent repayment or income-based repayment. Repayment begins within 60 days after the final disbursement of the loan unless the borrower requests a deferment while the student is enrolled at least half-time.

Loan Forgiveness and Discharge: Parent PLUS Loans are not eligible for certain loan forgiveness programs, such as Public Service Loan Forgiveness. However, if the parent borrower dies, the loan may be discharged.

To apply for a Parent PLUS Loan, parents must complete the Free Application for Federal Student Aid (FAFSA) and then submit a separate application for the PLUS Loan. The application process involves a credit check and signing a Master Promissory Note (MPN) agreeing to the terms and conditions of the loan.

It’s important for parents to carefully consider their financial situation and ability to repay the loan before taking on Parent PLUS Loans. Exploring other financial aid options, scholarships, or grants is recommended before relying solely on loans.

Federal Perkins Loan

The Federal Perkins Loan was a need-based federal student loan program that provided low-interest loans to undergraduate and graduate students with exceptional financial need. However, the program expired on September 30, 2017, and no new Perkins Loans have been awarded since then.

Here are some key points about the Federal Perkins Loan program as it existed prior to its discontinuation:

Eligibility: Students who demonstrated exceptional financial need and were enrolled at least half-time in an eligible program at a participating school could be considered for a Federal Perkins Loan. The loan amount awarded depended on the student’s financial need and the availability of funds at the school.

Interest Rate and Fees: Federal Perkins Loans had a fixed interest rate of 5% for undergraduate students and 6% for graduate students. The loans did not accrue interest while the borrower was in school, during the grace period (typically nine months after graduation or dropping below half-time enrollment), and during authorized deferment periods. Additionally, there were no loan origination fees or default fees associated with Perkins Loans.

Loan Repayment: The repayment period for Perkins Loans was typically ten years. However, the loan servicer or school’s financial aid office provided specific details regarding repayment terms and options. Perkins Loan borrowers often had various repayment plans to choose from, including standard repayment, income-contingent repayment, or income-based repayment.

Loan Cancellation and Forgiveness: The Federal Perkins Loan program offered loan cancellation or forgiveness options for borrowers who met specific criteria. For example, teachers who worked in low-income schools or taught certain subjects may have been eligible for loan cancellation. Other cancellation provisions were available for military service, certain public service professions, or volunteering with specific organizations.

It’s important to note that while the Federal Perkins Loan program has expired, existing borrowers who received loans prior to its discontinuation are still responsible for repaying their loans according to the terms and conditions set forth by their loan servicers or schools.

For the most up-to-date information and guidance regarding student loans and financial aid, I recommend visiting the official website of the U.S. Department of Education or consulting with your school’s financial aid office.

Private/Alternative Loans

Private or alternative loans are a type of student loan offered by private lenders, such as banks, credit unions, or online lenders, to help students and their families cover the costs of education. Unlike federal student loans, which are funded and regulated by the U.S. Department of Education, private loans are provided by individual financial institutions and have terms and conditions determined by the lender.

Here are some key points about private/alternative loans:

Eligibility: Private lenders have their own eligibility criteria, which may include factors like creditworthiness, income, and enrollment status. Some lenders may require a cosigner if the borrower has limited credit history or a low credit score.

Loan Amounts: The loan amount offered by private lenders can vary significantly. Some lenders may have minimum and maximum loan limits, while others may consider the total cost of attendance when determining the loan amount.

Interest Rates and Fees: Private loans typically have variable interest rates that are based on the borrower’s creditworthiness. The interest rates may vary over the life of the loan, meaning they can fluctuate with market conditions. Private loans may also have origination fees, which are charged upfront as a percentage of the loan amount.

Repayment Options: Private lenders offer various repayment plans, including fixed or variable monthly payments over a specified term. Some lenders may offer deferment or forbearance options, allowing borrowers to temporarily suspend or reduce their loan payments in cases of financial hardship. However, private loans generally have fewer repayment options and borrower protections compared to federal student loans.

Cosigners: Many private lenders require a cosigner, especially if the borrower has limited credit history or a low credit score. A cosigner is typically a parent, guardian, or another creditworthy individual who agrees to share responsibility for the loan and make payments if the borrower fails to do so.

Credit Requirements: Private lenders consider the borrower’s credit history and credit score when determining eligibility and interest rates. Borrowers with a strong credit history and high credit score are more likely to qualify for lower interest rates and better loan terms.

When considering private loans, it’s important to carefully review and compare the terms and conditions of different lenders. Factors to consider include interest rates, repayment options, fees, borrower benefits, and the overall cost of the loan. It’s advisable to exhaust all federal student loan options, scholarships, grants, and other forms of financial aid before turning to private loans, as federal loans often offer more favorable terms and borrower protections.

Official link : HERE