No Cosigner Student Loans and PLUS loans
When planning for college, it is important to understand all of the financial options that are available to you, including student loans with no cosigner. Many students often become confused about the Federal Direct PLUS loans because they are often mistaken to be no cosigner student loans and this is not the case. The confusion comes in with the fact that typically, Federal student loans do not require a cosigner. While the Federal Direct PLUS loans are comprised as part of the William D. Ford Federal Direct Loan Program, the PLUS loan is not a no cosigner student loan.
There are two loans that are part of the loan program that are student loans which do not require a cosigner. They are the FFFEL and the Direct Loans. When applying for the Federal Direct PLUS loan it is important to understand that credit is an important factor in determining approval. If you have bad credit, you likely will not qualify for this loan.
The Federal Direct PLUS loan is quite different from other types of student loans. This is because such loans frequently are applied for by parents rather than the student. The parent must be several eligibility requirements in order to receive this loan. The Federal Direct PLUS loan and the William Ford PLUS loan are offered to parents who have a dependent child in college. In order to qualify, the student must be categorized as being enrolled in school a minimum of half-time. The school attended by the student must also participate in the loan program. In addition, the student will need to be enrolled in a program that is deemed eligible by the loan program.
The credit rating and credit history of the parent is imperative when applying for this loan, unlike with other student loans. Parent applicants typically must have excellent credit in order to be approved for the William Ford Loan. This is precisely why this loan is not considered to be a student loan with no cosigner. If the parent applicant does not have a good credit rating, a cosigner will be required for this loan.
It should also be understood that the Direct PLUS loan differs from the FFEL PLUS loan. Parents are not allowed to apply for both loans simultaneously. Loan applications can be obtained from the financial aid office of your school, provided that school participates in the loan program. Your parents will need to complete the application and submit it. The financial aid office will then finalize the application and submit it to the US Department of Education.
The difference between the Direct PLUS loan and the FFEL PLUS loan is that a private lender is not necessary with the Direct PLUS loan. The money for this loan is provided through the Department of Education. The amount you may be eligible to receive through the Federal Direct PLUS loan is determined by adding the cost of the tuition and subtracting any other type of financial aid you may receive. The funds will be sent directly to the school if you are determined eligible to receive this loan. Any remaining funds will be disbursed to your parents only after all school fees and tuition have been paid. All other remaining funds must be spent on educational costs. This loan is an excellent option when all other no cosigner student loans have been exhausted and are not sufficient for covering the total cost of attending college.
The fixed interest rate is one of the great benefits of the William Ford Direct PLUS loan. The rate of interest for this loan is established on July 1st, annually. The interest rate may not change for the loan’s duration. Two repayment options are offered for the Federal Direct PLUS loan. Parents may opt to begin making payments 60 days following loan approval or they can choose to begin making payments once the student has left school or graduated.
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