What is a Direct PLUS Loan?
If you have been wondering what a direct plus loan is, look no further. Here you will find information about its eligibility, fees, and interest rates. This article will help you make the right decision on the direct plus loan you need. We have also included information on the repayment options of this loan. The benefits of a direct PLUS loan are many, so be sure to read on to learn more. Alternatively, you can read our review of the direct plus loan application.
The federal government is raising the interest rate on Direct PLUS loans for the 2021-22 school year to 6.28%. The rate will remain at that rate for the entire length of the loan. The loan fee is 4.228 percent of the total loan amount. Direct PLUS loans require a credit check and the maximum loan amount is the cost of attendance less other financial aid. Students who don’t have PLUS loans before must go through entrance counseling.
The interest rate for Direct PLUS Loans will be 5.30%. The interest will accrue from the time the loan is disbursed until the loan is paid in full. Each year, the DOE initiates a new credit report on the borrower’s behalf. The federal government requires two references who live at different addresses and have email addresses. The Office of Financial Aid certifies the borrower’s eligibility with the Direct Loan Servicer around June 1 each year.
Parents who have received a Direct PLUS loan can choose from one of several repayment plans. Among these options are the Standard Repayment Plan, Graduated Repayment Plan, Extended Repayment Program, and Income-Based Repayment Plan. The first payment on a Direct PLUS loan is due within 60 days of the last disbursement, or whenever the student graduates or drops below half-time enrollment status. Repayment options for a Direct PLUS loan are explained in the repayment terms and conditions.
The Standard Repayment Plan has a maximum duration of ten years and a slightly higher interest rate than the Interest Repayment Plan. The Graduated Repayment Plan has payments that gradually increase over the course of the loan, and it is best for people with low income today who expect to make more money in the future. On the other hand, the Extended Repayment Plan is ideal for those who expect to earn more money in the future and can afford a longer loan term.
The Direct PLUS Loan charges an origination fee, which is a percentage of the principle borrowed. For loans disbursed before October 1, 2022, the origination fee is 4.284%. The fee is meant to offset the costs of making low-interest loans. The fee is deducted before the loan money is disbursed, so the actual loan amount paid back is lower than the origination fee. Using a Direct PLUS Loan payment calculator, you can estimate the monthly payments based on the balance you owe on your loan.
Direct PLUS Loans are designed to cover the expenses of a dependent student in college. You don’t need to be in financial need to qualify for the loan, but you do need to have good credit. Fees on these loans are 4.228 percent of the loan amount. To avoid paying fees, ask the lender whether they charge any fees. The fee can be added to the loan disbursement, so make sure to check.
The federal government offers a student loan known as the Direct PLUS Loan to help pay for college. This type of loan is available to graduate and professional students. You will not have to make payments on your Direct PLUS Loan while you are enrolled at least half time. You will have up to six months to pay off your loan after you have graduated. If you are not enrolled at least half time, you may still qualify for a Direct PLUS Loan.
Once the Direct PLUS Loan is approved, the federal government conducts a credit check on the parent borrower. If there are adverse notations on the parent’s credit history, the parent will be notified by the Direct Loan Servicing Center. A parent with adverse credit may still be eligible for a Direct PLUS Loan, but only if they can demonstrate extenuating circumstances and that they have an endorser without a history of adverse credit.