Congrats! Your cap is already thrown, but tuition bills are staring at you in the face. What is this bizarre stage? You need funds to go to school, but there is nothing in your account. And then you realize that you should apply for the Parent PLUS Loan. But what is it?
Let us find out what it is first. The Parent PLUS Loan is a federal loan for an undergraduate student where parents are borrowers. The main characteristic of this loan is that parents are borrowers, and you are not. Hence, this debt is recorded in their credit report. And in case something goes wrong, it will be them who repay the debt even if you promise them you will do it. Interest rates are higher than those that will be offered to you on your federal student loan, e.g., Direct Subsidized Loan.
First of all, you should try using your own sources of funding. Did you fill out FAFSA? It is needed to be done first of all as this application determines whether you can receive Pell Grant or your federal loans. The Parent PLUS Loan appears only if all the sources are used.
The process of applying is totally digital. Unlike a traditional bank loan, your parent does not have to stand in line anywhere; he or she just needs to visit StudentAid.gov website. Your parent has to log into his or her FSA ID, not yours. It is needed because if you try to apply through this website, you will not manage. The parent will be able to fill out the PLUS Application and Master Promissory Note.
There will be a credit check. Do not be afraid: the credit score of your parents does not need to be record-breaking 850. The key is whether he or she has any adverse credit history that includes bankruptcy or defaulted loan. If the answer is yes, you will get another unsubsidized student loan under your name. It seems paradoxical, but it is true.
Thus, discuss all the details with your mother or father tonight. This conversation may seem awkward, but your education is worth discussing.