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What if parents and students don’t have enough financial
aid to cover all of the expenses?
The purpose of financial aid is to assist students and their families in funding their education. After all available aid has been offered to your son or daughter, you may still find yourself short on covering all of his/her educational expenses. If this is the case, a few alternatives exist that may assist you.
Scholarships
Many scholarships exist that can
help pay a portion of your expenses. Most scholarships are baexist that can help pay a portion of your expenses. Most scholarships are based upon academic merit, but there are many others available as well. Take some time to search the internet and other sources for scholarship information. Please note that you should NEVER pay for a scholarship search. There are hundreds of free search tools to help you.
Federal Direct Parent PLUS Loan
The Federal Direct Parent PLUS loan is also a federally sponsored and regulated national student loan program. The PLUS Loan enables credit-worthy parents of undergraduate, dependent students to borrow funds to pay for their child’s educational expenses. The funds are borrowed directly from the federal government, and the loan is held by the parent, not the student. The loan amount may not exceed the student's estimated cost of attendance minus any other financial assistance (financial aid, scholarships, etc) the student has been given. A net fee of 2.5% is assessed at the time the loan is made. The interest rate is fixed at 7.9%.
The PLUS Loan does require a credit check and some parents may not be eligible for the loan. If a parent is turned down for a PLUS loan and receives notification of denial, the parent should keep a copy of the denial and contact the Financial Aid Office, as there may be other options available to the student.
Once approved and proper paperwork completed and shortly before the term begins, funds from the PLUS Loan will be credited directly to the student’s account (Bursar/Billing) here at UW-Green Bay.
Repayment generally begins 60 days after the final disbursement of the loan, although parents do have the option to defer payments on the loan. As long as the undergraduate student on whose behalf they borrowed the PLUS loan is in-school and for a six-month grace period after the student drops below half-time enrollment, parents can choose to defer payment. Interest will accrue on this loan if the parent chooses this option.
In order to apply for the Federal Direct Parent PLUS Loan, parents should navigate to the Parent Loan/Application & Master Promissory Note area of the website in order to complete the proper steps.
Alternative Education Loans
After all of the federal loan options have been explored and exhausted, students can look into the Alternative Loan market. Unlike the Federal Programs, alternative loans are not regulated by the government. Each lender has its own set of application, credit, and co-signer requirements, and interest rates are variable, not fixed. The borrower is the student, with a co-signer required when there is limited student credit history. Generally, alternative student loan payments are deferred while the student is in school at least one-half time (with the interest on the loan accruing).
In choosing a lender, it’s always a good idea to start with a lender that you currently work with or you know has been in the student loan business for a significant amount of time. Be cautious of lenders whose names you do not recognize or those who offer you ‘teaser’ or introductory rates or prize incentives. Below are some questions you should ask when considering an alternative loan lender.
- What is my son/daughter’s interest rate? Lenders will advertise ‘as low as’ rates but it’s important to know what his/her rate will be.
- How often will the interest rate change and how will we be notified?
- What fees will be charged (reducing the proceeds)?
- How often do you capitalize interest on the loan? Lenders who capitalize interest less frequently will save more money over time.
- Is there a pre-payment penalty?
- Can the student defer payments while in school or if the student has financial difficulty?
- What benefits or rate discounts are offered, and what conditions have to be met in order to obtain the benefits?
- Does the lender have any local presence (if that is important to you)?
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