Federal Parent PLUS Loan
If your son or daughter needs additional assistance above and beyond his or her financial aid awards, one option is a federal parent loan. As a parent, you can borrow the difference between the cost of attendance and the amount of aid your student has been awarded or will receive. The maximum amount that you can borrow is determined as follows:
|Parent (PLUS) Loan Calculation Example |
|Cost of Attendance ||$21,920 |
|Aid student will receive ||-$12,000 |
|Parent loan eligibility ||$9,920 |
As part of your student’s financial aid awards, we offer you a parent Direct Loan (also known by its longer name—William D. Ford Federal Direct Loan). Your lender is the federal government. Of course, if based on your budget you do not need all of the loan, do not borrow the full amount. Just let our office know the lower loan amount you wish to borrow, and we will adjust your loan award. For more parent loan information (interest rates, repayment and more), visit the Department of Education.
Parent (PLUS) Loan Facts
- Loan is only in the parent’s name.
- Approval is based on credit decision.
- Repayment begins 60 days after the loan is fully disbursed.
- Deferment of payment is possible, but you must contact Direct Loans at 1-800-848-0979.
- Standard repayment is 10 years (120 monthly payments).
- Current fixed interest rate is 7.21% for the current academic year.
- Current origination fee is 4.92%.
- Loan cannot be combined or consolidated with student loans.
- Parent loans can be consolidated into one loan.
- Parent must complete the Master Promissory Note at www.studentloans.gov.
- If the loan is denied, the student is eligible to request an unsubsidized loan (amount based on your student’s current classification).
- Parent Loan Counseling may be required if the loan is initially denied.
Alternative Parent PLUS Loan
If you need additional funding to supplement your son or daughter’s financial aid package, an alternative Parent PLUS loan is an option. Alternative Parent PLUS loans are private loans offered by lending institutions. They are not part of the federal government’s Stafford (Direct) Loan program.
We encourage your son or daughter to file the Free Application for Federal Student Aid (FAFSA) in order to be considered for all other available aid programs before considering alternative loans. We recommend that you first utilize any grants or scholarships, as well as your work study and federal student loan eligibility, before considering alternative Parent PLUS loans. The interest rates and repayment terms with alternative Parent PLUS loans are generally less favorable than those of the federal Parent PLUS loan program.
The maximum amount you can borrow is the cost of attendance
minus any financial aid you receive (for example, grants, work-study, federal student loans and federal parent loans). Be aware that the amount certified by Texas State may, in order not to exceed your cost of attendance, be less than the amount you requested on your initial application.
To be sure you choose the right alternative Parent PLUS loan, you will want to consider the following:
- Does my school have to certify the application?
- Do I need a cosigner?
- How strict are the credit requirements?
- How long does the application process take?
- How will I receive my loan funds?
- When will my first payment on my loan be due?
- Does the loan have an annual or aggregate limit?
- How much in total loan fees will I pay?
- What is the current interest rate and how is it calculated?
- How long is the repayment period?
- What are my repayment options?
- Do I have any deferment options?
- Do I have a grace period with this loan? If yes, how long?
Texas State does not recommend any specific lenders for alternative Parent PLUS loans. If you feel that an alternative Parent PLUS loan may be best for you, we recommend comparing the loan products and lenders to find the best interest rate and repayment options for your situation. Please remember that you will have to pay back these loans with interest, so only borrow what you need.