PLUS Loans or Just PLUS?

First off, we should be saying just PLUS, not 'PLUS loans'. That's because the word 'loan' is already contained in PLUS, which is an acronym for Parent Loans for Undergraduate Students. However, just saying PLUS will probably only get you blank stares, not the dough. And it's mighty confusing too. So for the time we'll continue with the time-honored 'PLUS loans'.

PLUS Loans and Graduate PLUS Loans

What are PLUS loans? They are a certain type of federal student loan that is made out not directly to the student, but to his/her parent/parents. They have the responsibility for repayment, and if they fail to repay it is their credit that must suffer, not that of the student.
However, a new kind of PLUS loan has currently been introduced, called Graduate PLUS loan. Under this system, a graduate student can take out a PLUS loan in his/her own name, without any involvement of the parent(s). Why this type of loan is still being called a PLUS loan is not clear, because the term PLUS includes the word 'parent'.

PLUS Loans and Minuses

PLUS loans have one great advantage over other kinds of loan – their borrowing limit is much higher. Instead of providing partial finance for the total cost of education, PLUS loans are able to cover the whole course over four years of college.
However, there are certain pitfalls you need to avoid.
Unlike in the case of loans given to students, PLUS loan repayments start from day one. There is no grace period, you'll need to start paying as soon as you receive the money.
Secondly, the interest rates are higher than in loans given to students themselves. As of July 1 2006, the revised rate stands at 8.5% per annum.
If you're careful to manage your finances properly, PLUS loans can be the magic ticket to your child's college education.