This seems like it should be info that’s readily available, yet I can’t find it. When should a parent apply for a PLUS Loan? Before their child accepts an offer? After? In the spring or in the summer? I know the interest begins accruing right away so the timing seems important!
First of all, PLUS loans are the WORST deal. High points (I think 4.5). High interest (I think almost 8%). The interest begins to accrue from the day that the loan is disbursed, not from when you apply. Look into all other options first. You can file the FAFSA now, and they’ll do the loan for you in late August/early September.
Thanks! I know, the rates are not awesome - we will definitely be shopping for the best loan. I should have been more clear about that!
You should apply for a PLUS loan after you’ve figured out if you can afford it, but before your child accepts a school. If she only got $20k at BC (including loans) and you can’t pay much she won’t be able to make up the gap if your PLUS loan application is rejected. It’s better to have funding lined up before she commits to a school.
Have you figured out how to pay for your second kiddo if you take PLUS loans for the first? EFC is no longer going to be split when two are in school, so costs will go up, not down. If you’re planning to take PLUS loans out for your second child I’d ask the loan company if they can tell you of you’d be eligible to borrow a 2nd year for the first if you’re borrowing similar amounts for the second child.
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Thanks Austin. Really just wondering about the timing, not opinions on whether is a good or bad idea.
You apply after you make a matriculation decision.
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You can go to Federal Student Aid to read about how to apply. Many schools will require an additional application (contact the school to ask about the process and timing), but if you apply through the government website, you’ll know if your credit is approved. The approval is good for six months, so when the school goes to process your loan request later, they will use this credit check automatically. Note that applying online on this site is not the whole process, even if your school doesn’t require an additional application … you’ll still have to complete a master promissory note before the loan will pay out. Schools are not allowed to release federal loans more than 10 days prior to the start of the semester, so interest will not begin to accrue until that point.
To be honest, if you just need to know whether your credit will be approved, it’s pretty simple. Read this:
Adverse Credit History
To qualify for a Direct PLUS Loan, you cannot have an adverse credit history. A credit check is conducted on all Direct PLUS Loan applicants. Your credit history is considered adverse if your credit report shows that you are experiencing any of the following credit conditions:
Accounts with a total outstanding balance greater than $2,085 that are 90 or more days delinquent as of the date of the credit report, or that have been placed in collection or charged off during the two years preceding the date of the credit report.
Default determination during the five years preceding the date of the credit report.
Bankruptcy discharge during the five years preceding the date of the credit report.
Repossession during the five years preceding the date of the credit report.
Foreclosure during the five years preceding the date of the credit report.
Charge-off/write-off of a federal student aid debt during the five years preceding the date of the credit report.
Wage garnishment during the five years preceding the date of the credit report.
Tax lien during the five years preceding the date of the credit report.
kelsmom again: It doesn’t matter how much you are requesting … the credit approval is not based on the amount requested. Contact the school your child chooses to attend in June or July to ask how to apply, if they don’t send you instructions by then.
Thanks Kelsmom. I’m not concerned about credit (we have good scores). I just didn’t want to miss a deadline or get the timing wrong.