At the time of researching your student loan consolidation information options you need to investigate PLUS student loans, with the rising cost of education over the previous few decades, reliance on traditional Stafford loans has in many instances failed to cover most student expenses, the PLUS (Parent Loans for Undergraduate Students) loan plan was designed to close that gap.

Though the rate is higher than other loans the cap on borrowing is much more flexible and the loans are not need-based.

For the FFEL (Federal Family Education Loan) plan, in which private lenders fund the loan the rate is 8.5%, through the Direct loan program the U.S. Dept of Education funds the loan directly @ 7.9%, the difference of 0.6% is often very large over the lifetime of the average loan, in the initial year alone on a 10 year loan of $25,000.00 it amounts to virtually $2,050.00 as apposed to $1,920.00 that equals $130.00 in interest, for an exact calculation you ought to experiment with some sample strategies using a loan calculator such as the ones available on-line.

With PLUS loans parents are able to borrow up to the total amount of education minus any other financial aid money the student is awarded, though PLUS funds are not cheap they may make the difference when picking out which school to attend or whether to attend at all, however since PLUS loans aren’t need-based they do include a credit check, in this situation the student’s credit (with one exception discussed below) is not looked into, it’s the parents credit history which matters since they are the signers of the promissory note, they alone are responsible for the repayment of the loan.

In those rare instances where the credit history of the parent(s) makes them ineligible, a co-signer may participate in the loan, a relative or other party may agree to guarantee repayment and take on the legal responsibility as a co-borrower, with the recent problems in the sub-prime borrowing arena these cases are now reduce from the levels of the past, this hints that in borderline cases the requirement for a co-signer is more likely.

Apart from the changes in interest rates, another recent alteration to the plan is to now allow professional and graduate students to qualify for PLUS loans, similar interest rates and eligibility criteria apply, like other students they must be enrolled in an eligible institution and program no less than half-time, unlike most Stafford loan schemes, repayment of a PLUS loan begins immediately, generally within 60 days after the loan funds are disbursed, interest begins accumulating from the time the initially disbursement is made, both the main loan and interest are paid in regular monthly instalments whilst the student is in school, re-payments are made to the private lender in the situation of FFEL (Federal Family Education Loan) loans and to a U.S. Dept of Education servicing center in the circumstance of Direct loans.

Be certain to calculate carefully all the costs linked with obtaining a PLUS loan and look on it as a loan of last resort as even a home equity loan, for example may easily be less expensive since the interest is tax-deductible, it is essential to keep this information at hand when looking at any student loan consolidation information.

By: Ian Wilkie