PLUS loans are obtained by a student’s parent and held in the parent’s name. Indeed,
PLUS is shorthand for Parent Loan for Undergraduate Students (PLUS).
Like Stafford loans, PLUS loans come in two principal varieties - either FFELP (provided
by private lenders) or Direct Loans (provided by the federal government via your
school). PLUS Loans have a fixed interest rate of 8.5% and there is generally a
4% loan fee which is deducted from each disbursement check.
PLUS loans, unlike Stafford loans, are the responsibility
of the parent as the student is not a signer to the PLUS loan promissory note. PLUS
loans require a credit check which is mandated by the federal guidelines governing
PLUS loans are considered an alternative to private student loans and families should
discuss which option is best for them. While PLUS loans offer a fixed interest rate,
the loan is only in the parent’s name whereas private loans are generally in the
name of both the student, but a parent often cosigns. Different families have different values
as to which product suits them so we encourage you to research all your options.