If you’re a parent of a dependent undergraduate student or if you’re someone planning to attend graduate school, you’ve probably heard of the PLUS loan. The Direct PLUS Loan is a federal loan program that’s available specifically for these two groups of people to help cover the remaining cost of attending school after all other financial aid has been applied. Below we’ll explain the requirements, application process, and some tips if you’re considering getting a PLUS loan.
Requirements to Receive a PLUS Loan
No Adverse Credit History A credit history is a summary of your financial strength, including your history of paying bills and your ability to repay future loans. To qualify for a PLUS loan, you cannot have an adverse credit history.
Your child is going to college or career school—that’s great! But you may have questions about how to pay for it. If your child hasn’t completed the Free Application for Federal Student Aid (FAFSA®), ask your child to complete it today. Completing and submitting the FAFSA is free and quick, and it gives your child access to the largest source of financial aid to pay for college or career school, including loans YOU can receive.
After applying for financial aid, your child may receive an aid offer from the school that includes grants, federal work-study, scholarships, school and state aid, and federal student loans. Those federal loans may include a Direct PLUS Loan that you can get as a parent borrower. PLUS loans are an excellent option if you need money to pay your child’s education expenses, but you’ll want to make sure you understand the loan terms before you get one. Once you’ve taken out a PLUS loan, you must repay it, even if your child doesn’t complete their degree, can’t find a job related to their program of study, or if you or your child are unhappy with the education you paid for with your loan.
If you’re having difficulty repaying your federal student loans, then you might want to consider a deferment or forbearance. These two temporary solutions allow you to stop making or, in some instances, to lower your monthly federal student loan payment. While both can be helpful solutions if you’re experiencing temporary hardship, they aren’t great long-term solutions because they can be costly, and if you aren’t careful, your loan balance could be higher when your deferment or forbearance period ends.
Before you apply, here’s some information that can help you decide if deferment or forbearance is the best option for you.
1. Should I choose a deferment or forbearance?
The two main differences between deferment and forbearance are
the situations under which you may qualify, and
whether or not you’ll be charged interest when you’re not making payments.
Most borrowers first apply for a deferment because it’s usually the best option and then if they aren’t eligible for it, their loan servicer (the organization that manages your student loan) may grant a forbearance.
Your last high school prom is over and for most of you, graduation has come and gone. Yes, freedom and plans for a fun-filled summer are just around the corner. Before you know it, you’ll be loading up your belongings in the family minivan and heading off to college. You’re so ready, right? Well, maybe not. Here are some tips for things to do this summer before you head off to college.
1. Make sure your school has your financial aid ready for you
Early summer is a great time to check with the financial aid office at the school you plan to attend to make sure your financial aid is and all paperwork is complete. This will help you avoid any unnecessary surprises or financial aid delays when you arrive on campus.
Getting admitted into graduate school took a big weight off my shoulders, but it didn’t last long. I was already financially strapped from paying for four years of undergrad and I soon had to figure out how to pay for grad school. With the help of federal student aid and funding from my school, I was able to go to grad school with all my school expenses covered. If you’re preparing for grad school, here are my tips for success.
1. Start thinking about your graduate school finances early.
Before you even begin applications, you should understand what loans you already have and consider what your financial situation might look like as a graduate student. If you’re considering graduate school at the same institution you attended for undergrad, look for opportunities to get graduate credit while you’re still an undergrad. When I was an undergraduate senior, my university allowed me to take graduate courses that counted toward my master’s degree and saved me thousands in future tuition expenses.
2. Learn about the different types of federal aid for graduate students.
Your federal aid package will probably be different than what you were offered as an undergraduate. FAFSA4caster can give you an idea of what types of federal aid you will qualify for. Graduate students have a variety of federal student aid options and are considered independent on the FAFSA. Make sure you complete your FAFSA on time. You might have to complete it even before you know your admission status.
I bet many of you have seen ads on Facebook that sound something like this:
“Want Student Loan Forgiveness in Two Weeks? CALL NOW!”
“Apply for Obama Loan Forgiveness in 5 minutes!”
Usually, if something sounds too good to be true, then it probably is. There are countless ads online from companies offering to help you manage your student loan debt…for a fee, of course. While the U.S. Department of Education (ED) does offer some legitimate student loan forgiveness programs and ways to lower your student loan payments, they are all free to apply for. Don’t pay for help when you can get help for free!
If you’re a federal student loan borrower, ED provides free assistance to help:
Everyone wants their student loans forgiven. The perception is that very few qualify. But did you know that there is one broad, employment-based forgiveness program for federal student loans? Let me break down some key points of Public Service Loan Forgiveness (PSLF) to help you figure out if you could qualify.
[ 1 ] Work for a government or non-profit organization
Qualifying for Public Service Loan Forgiveness is not about your job, it’s about who your employer is. In order to qualify for Public Service Loan Forgiveness, you must work for a “public service” employer. What does that mean? Everyone has a different definition.
So you filed your FAFSA and got accepted to a college. Congrats! Your school will send you an award letter that lists different types and amounts of financial aid you’re eligible for. These types of aid could include grants, scholarships, work-study funds, or student loans. You might see two types of federal student loans in your letter: Direct Unsubsidized Loan and Direct Subsidized Loan. Some people refer to these loans as Stafford Loans or Direct Stafford Loans or just subsidized and unsubsidized loans. It’s important you know the basics about these two types of loans before you sign to accept either of them.
As a graduate student, I‘m no stranger to filing the Free Application for Federal Student Aid (FAFSA®), and when I filed my 2016-17 FAFSA, I was prompted to create an FSA ID—the username and password you need to log in to the FAFSA. I followed the step-by-step instructions, and voila! I easily created my very own FSA ID in no time!
Login options on fafsa.gov
The FSA ID replaced the Federal Student Aid PIN (check out this blog post explaining why). Students, parents, and borrowers must use an FSA ID to log on to certain Department of Education (ED) websites like fafsa.gov, StudentAid.gov, and StudentLoans.gov. The FSA ID is a more secure way to access and sign important documents without using personally identifiable information (PII).
More than 30 million FSA IDs have been created, and people, like me, have used their FSA ID more than 146 million* times. With any new process, there are some myths floating around about creating and using an FSA ID. Let’s tackle some of those right now…
When I was in my last semester of high school, I checked my family’s mailbox just as much as I checked Snapchat and Instagram combined. It was the season of admissions decisions, and I was getting letters from all the colleges I’d applied to.
But once I’d gotten into several schools, my attention shifted to my e-mail inbox. I was waiting on information that was just as critical: my financial aid offer from each college. I knew that for me, the amount of financial aid I got from a school mattered just as much as the general admissions decision. I’d fallen in love with each of the schools I’d visited, and I knew I’d be happy anywhere. Basically, my choice was going to come down to the money.
Analyzing different aid packages can seem like way too much math for the end of your senior year—at least it did to me—but it’s important stuff. Check out my four steps to make this analysis simpler.
What to do once you get an aid offer
1. Make sure you know what you’re looking at.
The financial aid offer (sometimes called an award letter) typically comes in an e-mail from the college’s financial aid office. The offer includes the types and amounts of financial aid you’re eligible to receive from federal, state, private, and school sources. Be sure you understand what each type of aid is and whether it needs to be paid back. For example, when I got into UNC-Chapel Hill, my aid offer was a mix of scholarships, which I didn’t need to pay back, and private loans, which I did. My offer from Duke (booooo) had mainly the same stuff with some grant money mixed in.
Click to download PDF.
Lucky for you, hundreds of colleges nationwide have signed on to present financial aid offers in a standardized format known as the Shopping Sheet. The Shopping Sheet is a standardized award letter template that makes it easy to compare financial aid offers from different schools. In addition to providing personalized information on financial aid and net costs, the Shopping Sheet also provides general information on the college, like graduation rate and loan default rate.
We all know college is super expensive; not only do you have to pay tuition, but there’s also room and board (for those of you staying on campus), a meal plan (yay for cafeteria food…), and textbooks (buying hundred-dollar books for one chapter). It’s a lot. Luckily for us, there’s help: scholarships! Of course there’s no guarantee that you’ll actually be awarded any money, and sometimes it can seem like a whole lot of work for a whole lot of nothing. But that’s why I’m here! I’ve gone through the process recently (and am doing it again), and I’m at your service with suggestions and tips.
A lot of these tips come from StudentAid.gov/scholarships, so check out that page for a more comprehensive, detailed guide to scholarships.
Types of Scholarships
There are scholarships for almost everything—all you have to do is look. Applying for scholarships doesn’t have to be tedious—find scholarships for things you’re passionate about. Some scholarships are really cool. There are scholarships for animal rescue, volunteering with the elderly, etc.; you can find them through specific organizations, too.
A college or career school education = more money, more job options, and more freedom. Yet, with more than 7,000 colleges and universities nationwide, deciding which college is right for you can be difficult. Maybe you want to find a school with the best nursing program, or study abroad options, or the best college basketball team; every person values different things. However, it’s also important to remember that college is one of the biggest financial investments you will make in yourself. Just as important as academics and extracurricular activities are the financial factors: how much a college costs, whether students are likely to graduate on time, and, if alumni are able to find good jobs and pay off their loans. That is why the U.S. Department of Education developed the College Scorecard. It provides clear information to answer all of your questions regarding college costs, graduation, debt, and post-college earnings.
As you’re comparing colleges, use the College Scorecard to compare these four things:
1. Net Cost
For starters, you should consider how much you’ll actually be paying on an annual basis. That’s not necessarily the sticker price, but it’s the sticker price minus all of the scholarships and grants that you will receive when enrolling in an institution. This is called the net price, and it’s important because it’s the average amount students actually pay out of pocket.The College Scorecard can show you the average net price of each school compared to the national average. It can also give you a net price estimate for each school broken down by family income. Here’s an example:
