Recent changes to the PLUS federal student aid program should provide last-minute help for families seeking to fund college or graduate school expense this fall. In light of the failure of the Massachusetts Educational Finance Authority to secure funding for a new round of college loans, students who were counting on MEFA loans are scrambling to find an alternative. With many banks withdrawing from the education loan marketplace, options for loan funding have been shrinking this year.
Some important changes have been made to the PLUS educational loan program (formerly known as Parent Loans For Undergraduate Students). Until recently, the loans were less attractive than other options because the payments to the loans began shortly after the issuance of the loans, instead of after the completion of the student’s education. PLUS loan repayments can now be deferred until six months after the student ceases to be enrolled on a least a half-time basis.
Another attractive aspect of PLUS loans is that they offer fixed interest rates; the current rate is 7.9% for direct loans and 8.5% for PLUS loans made through the Family Federal Education Loan Program. Parents may borrow amounts up to the student’s total cost of college, minus any financial aid received.