The Federal Government currently provides a fixed interest rate loan that your parents can take out to help pay for your education. This is a nice alternative if they can afford it as it will cut down on the amount of loans that you will have to pay off after you graduate. PLUS loans are currently offered through both the Federal Family Education Loan (FFEL) and the William D. Ford Federal Direct Loan (Direct Loan). Each of these providers lend your parents the money you need for school, however they will do so at different interest rates.
The better of the two options is the Direct Loan which carries an interest rate of 7.9% for the life of the loan. You can apply for this type of loan by filling out a Direct PLUS loan application which can be obtained from your schools financial aid office.
The less desirable option is the FFEL PLUS loan. The interest rate is also fixed, however it is higher than the Direct Loan, currently 8.5%. Like the Direct Loan, you can apply for the FFEL PLUS loan through your school, lender or state guaranty agency.
Unlike Stafford Loans, you will need to begin repayment on your PLUS loans within 60 days of initial disbursement. Also there will be no assistance with the interest like the subsidized Stafford loan. They are a nice option for anyone who has parents that would like to assist their children in college, but that do not have the savings to pay for tuition in full.
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