Difference between the student PLUS loan and a federal direct subsidized loan?
Hi,
Im starting school in the fall and I checked my financial aid status, I am allowed to receive 2 types of loans: 1) fed direct loan subsidized 1, and 2.) a fed direct PLUS loan. What is the difference between the two? when do I have to pay them back? I dont want my mom to use her credit, and since I know PLUS loans are for parents, it is my idea, not hers to take it out, so can i use my credit instead? what is the interest on each of them?…..Should I just decide to take out a credit union student loan ( I am considering the usc credit union loan), instead of two different loans, in order to just have one balance? the usc credit union collegiate loan is available to all students regardless of where they attend right? I mean, besides having your credit approved first. has anyone taken out a student loan from this credit union? any info is greatly appreciated.
With the Stafford subsidized loan the interest rate for the 08-09 academic year is 6.0% however the federal government will pay the interest for this loan as long as you are in school above half-time. Repayment on this loan will not begin until you leave school or drop below half-time. There is no penalty if you decide to pay off this loan early.
The PLUS loan is a parent loan that is credit based. If your parent decided to apply for the PLUS loan and is denied then you would be eligible for an additional Stafford unsubsidized loan in your name. The interest for this loan is 6.8% and starts acruing immediately. You can either choose to defer the interest payments until you begin to repay your loan or you can make interest-only payments while you are in school to keep the loan total down. There is also no penalty if you decide to pay this loan off early.
If your parent is approved and decided to take out the PLUS loan the interest rate is 8.5%. A new federal regulation starting with the 08-09 academic year is going to allow parents to defer their PLUS loan payments until after the student leaves school or drops below half-time. Even if they defer the principal payment though the interest will keep acruing.