What is a PLUS Loan?

A PLUS Loan is a low-cost way for parents to help their children with school loans. By applying for the loan that is subsidized by the federal government, a parent can help their children with the every day expenses associated with college loans. There are several benefits associated with the use of a PLUS Loan. Parents are able to borrow their child's full tuition cost, while not having to use financial aid. The credit decision is instantaneous and the fixed rate for the loan is low. You'll receive a rate discount if you choose to have your payments automatically deducted from a banking account each month. You can choose to have a payment delay through forbearance and all the repayment plans to choose from are quite flexible.

Applying is easy

Applying for a PLUS Loan is an easy process. You can either opt to apply online through the College Board, or you can follow the instructions given to you by they financial aid office at your child's school. During the application process, all you need to provide is your information, as well as the information of your child. Approval is typically given within minutes.

Now what?

Once you are approved, you need to fill out and sign what is called a PLUS Master Promissory Note, or an MPN. The MPN is the contract between you and your lender that states that you agree to the loan's terms and will pay back what you've borrowed. Some schools accept an electronic signature. If your child's school does, you can sign the MPN online. The MPN remains active for a decade. The best part about this is that, if you ever find you need to borrow more money, you only need to make a simple request and endure a credit check.

What if you aren’t approved?

Not everyone is approved for a PLUS Loan the first time. Your lender can help you to resolve any outstanding credit problems that may stand in your way so you can be on your way to an approval. To be eligible for a college PLUS Loan, you must be either a citizen of the United States, or a non-citizen who is eligible and can show that there are no negative marks on your credit report. You will need to have your credit approved and your child has to be a dependent enrolled at least half-time in an undergraduate program.