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Financial Aid
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  • Explore other financing options

    What if the aid that is offered on the Award Letter isn't enough to cover your costs?

    Most families choose one of two options for additional funding for education: a Federal Direct Parent PLUS Loan or an Alternative Education Loan from a private lender.

    Federal Direct Parent PLUS Loans
    • The Federal Direct Parent PLUS Loan Program provides loans for parents of dependent students attending post-secondary schools.
    • The Direct PLUS Loan is an education loan, with an interest rate of 7.21% for the 2014-15 academic year, that allows a parent to fund up to the entire cost of their student's education minus financial aid already awarded.
    • Eligibility is based on credit worthiness of the parent. Parents and/or step parents of dependent undergraduate students are eligible to borrow under the Federal Parent PLUS program.
    • To apply, go to our Parent PLUS Loan page.
    Alternative education loan from a private lender
    • Students who need additional funds for education, beyond what was awarded on their financial aid award letter, might consider an alternative education student loan.
    • These loans are private educational loans from a lender and are not guaranteed by the federal government.
    • Approval of an alternative loan is based on creditworthiness. Most students will require a co-signer.
    • The student should file a Free Application for Federal Student Aid (FAFSA) to determine eligibility for federal and state aid before applying for an alternative education loan.
    • To apply, go to our Alternative education loans page. 
    Graduate Students

    Graduate Students can apply for either a Federal Direct Graduate PLUS Loan or an alternative education loan.

    How much can be borrowed for a PLUS Loan or Alternative Education Loan?
    • See the amount listed as "Your Other Loan Eligibility*" on your Financial Aid Award.
    • You CAN NOT accept the item "Your Other Loan Eligibility*" on your Financial Aid Award because it IS NOT an awarded item. It is only an ESTIMATE of the amount that can be borrowed in a Parent PLUS Loan, a Graduate PLUS Loan (Graduate students only) or a private alternative education loan.
    • A separate application is required for any of these loans.
    • This amount is the maximum that can be borrowed in either a PLUS Loan or an Alternative Education Loan.
    • Borrowing the maximum amount can often result in the student receiving a rather large refund after paying their university charges. For assistance with determining a precise amount to borrow, use our "Calculating how much you need to borrow for college" handout.
    Comparison: Direct Parent PLUS Loan vs. Alternative Education Loan

    The Federal Direct Parent PLUS Loan is a low-interest education loan that allows a parent to fund the entire cost of their student's education minus financial aid already awarded. Before making a decision whether to apply for a Direct Parent PLUS Loan or co-sign an alternative education loan, please take a moment to consider the compelling differences between the two.

    Interest Rate
    Parent PLUS Loan: Fixed at 7.21% for the 2014-15 academic year 
    Alternative Loans: Variable (although some lenders offer the option for a fixed rate), usually no cap. Many programs reset quarterly. Varies from lender to lender. Usually based on a consumer index (prime, commercial paper, LIBOR, etc) plus a margin.

    Borrower
    Parent PLUS Loan: The parent is the borrower and the loan is in the parent's name.
    Alternative Loans: The student is the borrower. While the loan is in the student's name, usually a parent is included as a cosigner. Cosigner bears equal responsibility for loan repayments. Generally, a student might receive a better interest rate with a credit worthy co-signer.

    Loan Amounts
    Parent PLUS Loan: Up to the cost of the student's education minus other financial aid.
    Alternative Loans: Minimum and maximum borrowing limits vary from lender to lender. Cannot exceed cost of attendance minus other financial aid.

    Cancellation
    Parent PLUS Loan: Loan forgiven if student or parent dies.
    Alternative Loans: Not usually discharged if student dies. If there is a co-signer, co-signer will usually continue to be responsible for repayment of the loan.

    Interest Accrual
    Parent PLUS Loan: Parent may postpone payments until student is out of school six months (must apply with servicer each year). Interest accrued during the postponed period is capitalized. Parents may also choose to make interest-only payments while student is in school.
    Alternative Loans: Interest accrues while student is in school. Some programs require the student to make minimum monthly payments or interest-only payments while in school. If deferred, repayment usually begins 6 months after student graduates or leaves school.

    Deferment/Forbearance
    Parent PLUS Loan: Parent may defer payment on this loan until the student is out of school six months (must apply with servicer each year). To apply for this deferment, contact the Department of Education after the loan is disbursed.
    Alternative Loans: Varies from lender to lender. Check with the lender for availability.

    Qualifying
    Parent PLUS Loan: Based on credit history; debt-to-income is not considered thus making it easier to qualify.
    Alternative Loans: Varies from lender to lender but often debt-to-income ratio is considered in credit decision. Many lenders will require a credit-worthy co-signer.

    Ease of Application
    Parent PLUS Loan: Very easy. Parent must complete a Direct Parent PLUS Loan Master Promissory Note (Direct Parent PLUS MPN) when applying for their first Direct Parent PLUS Loan. Parent must also complete UW-L's Parent PLUS Loan Request Form each time they wish to borrow a Direct Parent PLUS Loan.
    Alternative Loans: On-line applications are available for most loans. Supporting documentation is generally required (proof of income, co-borrower addendum, etc).

    Fees
    Parent PLUS Loan: 4.292% Origination Fee for the 2014-15 academic year.
    Alternative Loan: Fees vary from lender to lender. May include origination and/or repayment fees.

    Repayment Terms
    Parent PLUS Loan: Repayment begins 45-60 days after loan is fully disbursed although parent can request that the Department of Education delay repayment until after the student is out of school six months. Parent must apply for this deferment each year). 10 year repayment period.
    Alternative Loan: Varies among lenders. Typically, 10 - 25 years.



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