Government’s PLUS Program Offers More Than Parent Loans

Although most undergraduate students must provide their parents’ financial information when applying for federal financial aid for college, not all parents may want or be able to help their children pay for college. Colleges and universities, however, typically do expect parents to make some financial contribution to their dependent children’s college costs.

When applying for college aid, dependent students – those students who are claimed on someone else’s tax return – may be eligible, depending on their and their parents’ income, for federal grants and student aid, state-funded grants and school loans, and a school’s institutional student aid.

Graduate students and non-dependent undergraduates may also apply for federal, state, and institutional financial aid.

PLUS Parent Loans

In many cases, a financial aid package may not be enough to cover what your school expects you and your family to pay for college, even when combined with any scholarships and savings you’re bringing to the table.

If you’re an undergraduate and a dependent of your parents, and if your parents are willing to help you pay for college, they may be able to take out a federal parent loan – known as a PLUS loan – that can be used to pay for the cost of attending college.

PLUS parent loans are available in loan amounts that cover up to 100 percent of your certified cost of attendance.

PLUS Graduate Student Loans

PLUS loans, however, are no longer just for parents and their dependent undergraduates.

Beginning in 2006, the federal government opened up the PLUS program to graduate students as well. PLUS graduate student loans, known as Grad PLUS loans, can be used, like PLUS parent loans, to pay up to 100 percent of your certified cost of attendance.

Under federal rules, graduate students are automatically regarded as non-dependents and are thus ineligible for PLUS parent loans, which are only available to parents of undergraduates.

Grad PLUS loans offer graduate students an additional college financing option to scholarships, grants, fellowships, and federal Stafford graduate student aid.

PLUS Loan Eligibility

Eligibility for PLUS parent loans and graduate loans is determined, in part, by the information you submit on the FAFSA, the Free Application for Federal Student Aid. All students, both graduate and undergraduate, who are looking for federal financial aid for school must complete a FAFSA each year.

PLUS and Grad PLUS loans, unlike federal Perkins college loans and federal Stafford student loans, are credit-based loans that require a modest credit check.

In order to meet PLUS credit requirements, parent and graduate student applicants must be free of serious adverse credit items, such as a recent foreclosure or bankruptcy, significant delinquencies (defined as 90 days or more) on credit accounts, or a default on another federal parent or student loan.

Undergraduate students whose parents fail to qualify for a PLUS loan are eligible to receive additional money in federal student aid to help meet their expected family contribution to their college costs.

PLUS Loan Interest Rates

Loans made through the federal PLUS program allow you to borrow money for college at a fixed interest rate.

PLUS loans, both for parents and graduate students, currently carry a fixed interest rate of 7.9 percent. For graduate students looking at their graduate loan options, this rate is slightly higher than the fixed 6.8-percent rate available on federal Stafford graduate student aid.

PLUS and Grad PLUS loans are also subject to a 4-percent servicing fee, which is deducted from the loan proceeds at the time the loan is issued.

Repaying Your PLUS Loan

Until 2008, repayment on PLUS parent loans would begin 60 days after the loan funds were disbursed. However, under new legislation passed in 2008, parents may now defer repayment of their PLUS parent loans until their student graduates or leaves school, and for an additional grace period of six months following graduation.

The rules for PLUS graduate student loans are slightly different. As a graduate student, you may defer repayment on your Grad PLUS loans while you’re still in school at least half-time, but there’s no six-month grace period once you leave school. This timetable should be an important consideration and puts additional pressure on you to have a repayment plan in place before graduation.

Unlike some federal student loans, PLUS and Grad PLUS loans are not subsidized, so interest accrues on the loan balance from the time the loan is made, even if you’re currently deferring your loan payments.

What Kind of Personal Loan Is Right For You?

Personal loan choices are numerous with several different terms and conditions. Deciding elements in what choices are accessible to you depends on just what you would like to do with the loan proceeds, the time period of the loan, and so on. These variables and others assist loan companies to determine precisely what your loan is likely to cost you.

Signature loans are unsecured by equity of any type. Understandably, the interest you have to pay for one of those loans will most likely be greater. Additionally, due to the greater risk associated to the loan provider, it might be more challenging to obtain some of these loans, and unfortunately your credit scores weighs in when it comes to deciding eligibility. A lot of these unsecured signature loans are generally worthwhile for individuals who own very little of value and has basically no downside to his or her overall credit score.

Since the only recourse a lender has got with this kind of personal loan is by means of the court system, larger rates of interest are usually imposed, additionally, the tendency is not really to give a loan any greater than $25,000, if that.

Nevertheless, sometimes, the larger rate of interest with this particular type of personal loan is more than outweighed simply by their added benefits, which usually require no tying up of private property without demand for supplying a financial statement as well as tax returns.

Usually though, even though you have got poor credit, when you have assets that are of value to offer a lender as a guarantee, it’s usually best to get a secured loan to lower not just the interest rate, but also your monthly obligations due to the extended loan terms, which are not the condition with unsecured loans.

Essentially these types of signature loans are loans you may use to get all sorts of things such as short-term or personal loans for financing on a big screen TV for instance. Use the cash as you like. To find the most favorable interest you certainly want to check out a secured personal loan in which you use your home or possessions to get the funds. Signature loans are normally smaller unsecured loans which range from $100 to $5000.

Cash advances by using charge cards – Needless to say, credit cards are traditionally used for “loans,” and there’s nothing wrong with that-as long as you do this for just a brief period of time. Preferably, you would use a charge card having an “introductory” interest rate that’s less than typical (zero interest in some instances), which is likely to end up being for a year or less. If that’s the case, it’s possible that you’ll pay out absolutely nothing for your loan… but as long as one does, in fact, pay it back within the granted period of time.

If you choose to use a charge card which has an introductory APR, you’ll find that you may possibly be entitled to additional incentives, such as points which can be used to get products or services, cash back, as well as commercial airline miles.

Payday loans – When you’re an individual who has a less-than-perfect credit rating, you might be capable of getting a short-term loan that is generally known as a payday loan. By short-term we are referring to a two-week time period that will depend with your company’s payday schedule. Understand that cash advance loans do not come inexpensively! Online payday loans have the greatest expense of just about any personal loan currently available. Rely on them only when you’ve got no other option, and eliminate them as quickly as possible.

The majority of “payday” loan companies will ask to get a post-dated check in the amount of the borrowed funds, including the loan company’s service fees. Many of these post-dated checks are going to be for the date of your subsequent paycheck. The loaner’s service fees tend to be state governed more often than not, however the common range can be $15 to $35 for every $100 borrowed. If you don’t fulfill the obligation, a lot of these fees can move up.

Signature loans are a good alternative to those pressure-ridden payday loans. Despite the fact that they are similar, signature loans supply you with the choice to pay them back in reduced payments on every payday, rather than needing to go ahead and take the entire amount of money from your following check. This can be a God-send for personal household emergencies!

Bad credit loans – There are actually specified bad credit loans currently available due to the growing number of individuals that have poor credit ratings. However, be careful and research your options, simply because that appealing rate of interest which you notice marketed online or anywhere else isn’t always the rate you will end up having at this specific loan company, and that’s due to the fact that lenders can promote their least expensive annual percentage rate as long as that’s the rate in which a minimum of two-thirds of their total loans carry. You might get into the regrettable 1/3!

There are plenty of less-than-perfect credit loans on the web, and as with anything else regarding money on-line you have to be particularly careful in this area. Prior to going personal loan browsing, take a look at many alternatives. Make a decision before you start the amount you need to borrow and, most importantly, just how much of a payment you are able to squeeze into your budget.

Are SBA Loan Limits Good for Small Businesses?

Last March, the Small Business Administration (SBA) assigned a limit on the agreement it was offering on “goodwill” financing, limiting them to $250,000 or 50% of the total amount of SBA loan, whichever amount was lower. “Goodwill” financing is an essential part of the SBA loan designed to obtain the intangible assets for any existing business. The limits mentioned beforehand were set to avoid the inflation of the intangible assets’ value. This is one of the reasons why you need to be practical when applying for an SBA business loan as a step towards achieving your entrepreneurial dreams. There are many other important things that you need to know about utilizing SBA loans to start or acquire a business.

The SBA loan limit

An SBA business loan is one of the most popular methods of funding a small business. Basically, this type of loan offers banks a guarantee on any small business loan, giving banks more reason to approve the loan.

There are two major SBA business loan programs available today. These are:

- The 7(a) loan program – This is an organization’s most adaptable and popular initiative. It is designed to offer SBA commercial loans to small businesses, both start-up and existing.

- The CDC/504 loan program – This program offers long-term and fixed-rate funding, which is aimed at obtaining fixed assets.

The loan programs have distinct maximum loan amounts. The 7(a) loans have a maximum limit of $2 million, while the CDC/504 loans range from $1.5 million to $4 million, depending on the type of business and other criteria.

As a means to assist small businesses during the recession, the current US administration proposed to increase the loan size cap for standard CDC/504 and 7(a) loans to $5 million. A similar proposal was submitted for CDC/504 manufacturer loans, to be increased to $5.5 million. These developments will allow entrepreneurs to take on larger ventures or projects. Congress is now considering the said proposal.

The SBA loan requirements

Aspiring entrepreneurs need to meet a number of requirements to be eligible for an SBA loan application. First off, you must have applied for a conventional business loan from a commercial institution, and have been turned down. You will not be eligible for SBA business loans if you are able and capable of acquiring investment funding from other sources. In addition, you are required to identify the specific program in which you want to receive an SBA business loan for, because each program covers different requirements:

- For loan 7(a), you must have the ability to pay back the loan from your business cash flow, with a maximum duration of 25 years. Also, your business should be for profit and should meet the requirements set by SBA for small businesses.

- For the loan CDC/504, it is only be accessible if your venture is operational for profits, has a net worth lower than $7,000,000, does not exceed the size required by the SBA, and has a net income that does not exceed $2,500,000. This type of SBA loan can only be utilized for projects with fixed assets.

For faster assessment of your eligibility for SBA loans, you need to prepare the following information when you meet with a lender:

- business profile that includes the type of business, length of operation, and employee statistics.

- Loan request that shows the purpose, type of loan, and the amount.

- Collateral description

- Business financial statements for the past 3 years, including the latest interim statements.

- Personal financial statements of other officers, partners, stockholders and owners.

The SBA loan rates

The SBA loan rates are among the major concerns of most entrepreneurs when applying for an SBA business loan. This is, indeed, a complex issue that needs thorough discussion between you and the lender.

In 7(a) type SBA loans, the interest rates can be negotiated, but these should not exceed the level required by SBA. On the other hand, fixed rate loans have the following interest rates:

Loans amounting to $50,000 or higher – base rate plus 2.25 percent (with maturity of less than seven years) or base rate plus 2.75 percent (with maturity of seven years or more)
Loans between $25,000 and $50,000 – base rate plus 3.25 percent or base rate plus 3.75 percent.
Loans $25,000 or less – base rate plus 4.25 percent or base rate plus 4.75 percent.
The CDC/504 commercial loan rates are fixed to an increment that is above the market of U.S. Treasury’s 5-year and 10-year issues.

Aside from the loan programs mentioned above, there are many others available for prospective entrepreneurs. As the country’s economy slowly rises out of the shadows of recession, this is exactly the kind of assistance small businesses need to succeed and prosper. Now, which types of SBA financing programs appeal most to your entrepreneurial preference?