Error: The interest rate on the PLUS loan depends on your credit
The interest rate on the PLUS loan does not depend on the borrower's
credit score or credit history. The interest rate on the PLUS loan is
fixed at 7.9%.
Eligibility for the PLUS loan, however, requires the borrower to
not have an adverse credit history. An adverse credit history is
defined as having a derogatory event in the last five years (e.g.,
bankruptcy discharge, foreclosure, repossession, tax lien, wage
garnishment or default determination) or a current delinquency on any
debt of 90 or more days.
Error: The interest rate on the PLUS loan is capped at 6.8%. Some
banks do better.
The interest rate on the PLUS loan is capped at 9.0%. This cap was
rendered moot by the switch from variable rates to fixed rates on new
PLUS loans made on or after July 1, 2006. The fixed interest rate on
the PLUS loan is 7.9%.
6.8% is the fixed interest rate on the unsubsidized Stafford loan.
Since July 1, 2010, all new federal education loans have been made
through the Direct Loan program. Banks are no longer involved in
making new federal education loans.
Error: The most you can borrow through the PLUS loan is $2,000
after all other aid.
The annual loan limit on the PLUS loan is the full cost of attendance
minus other aid received. There is no specific dollar limit on the
The speaker is blending the PLUS loan program with the Stafford loan
program. The Ensuring Continued Access to Student Loans Act of 2008
increased the Stafford loan limits for undergraduate students by
$2,000 while keeping the loan limits for subsidized Stafford loans
unchanged. The unsubsidized Stafford loan limit is the same as the
overall Stafford loan limit minus any amounts received as a subsidized
Stafford loan. Since the overall Stafford loan limits are $2,000
higher than the subsidized Stafford loan limits, this means that all
undergraduate students can borrow at least $2,000 through the
unsubsidized Stafford loan program. Dependent students who do not
qualify for subsidized Stafford loans can borrow $5,500 to $7,500 per
year, depending on year in school. Independent students who do not
qualify for subsidized Stafford loans can borrow $9,500 to $12,500 per
year, depending on year in school.
Error: You can also get an Academic Competitiveness Grant of
$1,500 and a National SMART Grant of $2,000.
The Academic Competitiveness Grant and the National SMART Grant
programs were funded from 2006-07 through 2010-11 and are no longer
available. The award amounts under the Academic Competitiveness Grant
were $750 during the first year of study and $1,300 during the second
year of study. The award amounts under the National SMART Grant were
$4,000 per year during the third and fourth years of study.