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1. |
Are all Federal
Graduate PLUS loan programs the same?
Federal
regulations govern certain terms of the loan such as the
interest rate of 8.5% fixed, available deferments and
forbearances, and the length of repayment. These items will
be consistent from one lender to another. What can
differ is the way the lender handles the in-school
deferment, for example, or the interest capitalization
frequency (less is best), and repayment incentives. You will
want to consider your options, and one way to compare is to
ask the lenders you are considering these
questions so you can make an
informed decision. The relationship with your lender will
last anywhere from 10 – 30 years so you should examine your
options carefully.
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2. |
Is a variable
interest rate private loan better than a fixed rate Federal
Graduate PLUS?
It may come down to your individual preference and comfort
level with the interest rate environment. This is the same
question home owners need to consider when they are looking
at a fixed versus variable rate mortgage. It may help to
look at
historical information that can give you an idea of what interest
rates have done in the past. T.H.E.'s private loan interest rates
are based on the most current 3 month LIBOR rate plus an index.
For more detailed information on current interest rates you may contact
T.H.E. Customer Service. However, past performance is
not a guarantee for how future interest rates may perform.
PAST LIBOR:
5 yr average = 2.32%
10 yr average = 3.98%
20 yr average = 5.10%
If you would rather sleep well at night knowing you have a
fixed interest rate loan that will not go up, then a fixed
rate Federal Graduate PLUS loan may be what you choose. If
you feel that a variable rate will run consistent with a
lower rate trend, then a variable rate private loan may be
best for you. The interest rate is one component to
consider. You should also consider other
attributes of the loans.
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3. |
Do I need to obtain my Federal Stafford loans before I can
obtain a Federal Graduate PLUS?
Yes, the way the regulations read with the new Federal
Graduate PLUS, students “must have applied for their annual
loan maximum eligibility under the Federal Subsidized and
Unsubsidized Stafford Loan Program before applying for a
Federal Graduate/Professional PLUS loan.” *
*As stated in Dear Colleague Letter GEN-06-02
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4. |
Should I select the same lender for my Federal Graduate PLUS
loan as my Federal Stafford loan?
Yes, it is in your best interest to select the same lender
to ease the repayment of your loans. T.H.E.
offers combined billing for all of your loans that are
funded by T.H.E. so you have the ability to make one payment
for multiple loans. Having your loans with one lender also
cuts down on the correspondence you may need to have if
you are filing a deferment or forbearance.
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5. |
Do I need to make payments while I’m in-school?
Provided you are recognized as enrolled at least half-time
by your school, your Federal loan(s) will be eligible for an
in-school deferment and payments will not be required until
you either separate from school (i.e., withdraw or graduate)
or drop to less than half-time.
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6. |
Do I need to complete any paper work to request an in-school
deferment?
No, if you select T.H.E. as your lender for the Federal
Graduate PLUS loan we will obtain this information
automatically based on your school’s reporting of in-school
status. If you select another lender, you will want to ask
how they process the in-school deferment and if you are
required to complete any paper work.
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7. |
What is the difference between a PLUS loan parents take out
for undergraduate students and the Federal Graduate PLUS?
The Federal Graduate PLUS loan was
introduced as a result of the Deficit Reduction Act that was
enacted in February of 2006 and it is geared specifically to
graduate students. The borrower is the graduate student for
this loan. This loan is only available to graduate students.
The Parent Loan for Undergraduate Students (PLUS) is a loan
parents take out for their dependent child. In this case the
parent is the borrower, not the student. This loan is only
available to parents of undergraduate students.
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8. |
What is the credit criteria to obtain
the Federal Graduate
PLUS loan?
Credit approval is based on federally mandated criteria, not
a credit score. In order to qualify, the student may not
have any of the following items on their credit report:
• Any current delinquency of 90 days or more
• Any of the following items within the preceding five years
of the date of the credit report:
Default, Bankruptcy, Discharge, Foreclosure, Repossession,
Tax Lien, Wage Garnishment, Write-off of a Title IV Debt,
Open Collection
If I obtain a credit pre-approval through T.H.E., how long
is it valid?
6 months
Is my credit evaluated every time I request a new loan?
Yes, unless your credit decision is within the preceding 6
months.
Should I obtain a copy of my credit report in advance of
applying for a loan?
Yes, if you think you may have one or more of the items outlined
in the credit requirements listed above you may want to obtain your credit report in
advance. You may be able to fix an item such as the
delinquency by simply making a payment and bringing your
delinquency to less than 90 days. If you have had a
situation with a discharge or collection item for example,
you may be able to obtain a “settled in full” status if you
work with the entity to reach a satisfactory arrangement. If
you are able to fix an item, it is no longer considered in
the credit evaluation and it may result in your credit being
approved.
What if my credit is denied, what are my options?
- Apply with an endorser
- Correct any invalid information on your credit report that
may have led to the denial
- Appeal the denial
- Contact the financial aid office at your school; they may
have other options for you to consider
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9. |
What is an
endorser and who can I have as an endorser?
Think of an endorser like a cosigner. They can help you
obtain a Federal Graduate PLUS loan if you do not pass the
credit criteria outlined above. An endorser can be another
family member such as a parent, sibling, uncle/aunt, or a
close friend or co-worker. They are liable for repayment of
the loan should you not make payments.
When is an endorser needed?
When your credit does not meet the criteria outlined above.
Does my credit need to meet a minimum set of criteria with
an endorser?
No.
Can the endorser be released from the loan after so many
on-time payments?
No, however, you do have the option of consolidating the
loan and through that process the Endorser would be
released.
Is the loan reported on the endorser’s credit report and
will it show up as their debt?
No, T.H.E. does not report this debt under the endorser’s
credit unless they actually become delinquent on the
obligation. Therefore it does not affect their credit
report or their credit score until a delinquency would
occur. This may not be the position of other lenders.
What are the obligations of an endorser?
The endorser must repay the debt if you are not able to.
They must notify us of any changes in their address,
telephone number, e-mail address, name, employer or employer
contact information.
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10. |
Can I consolidate a Federal Graduate PLUS?
You can consolidate a Federal Graduate PLUS loan, however,
you will want to weigh the benefits of doing so.
In addition, you are able to extend your repayment term without
consolidating if you have $30,000 or more in federal student loan debt.
A consolidation loan does not offer any repayment benefits.
What changes if I consolidate my Federal Graduate PLUS Loan?
When you consolidate, you may be able to extend your
repayment term (up to 30 years, depending on your total
outstanding debt). If you have $30,000 or more in Federal Loans, you may opt to extend your
repayment term to 25 years without consolidation.
If I have my Federal Stafford and Federal Graduate PLUS loans with
T.H.E., can I send in one payment even if I don’t
consolidate?
Yes, your loans can be combined into one billing statement
to ease the process of making payments.
If I’m unsure about the Federal Graduate PLUS, or
consolidation and other repayment strategies, who can I
contact?
T.H.E.’s
customer service experts are available to help
you with questions Monday through Friday from 7am to 5pm Central
time.
My Federal Stafford Master Promissory Note (MPN) is good for
multiple years. How long is the Federal Graduate PLUS MPN
valid for?
10 years
* see terms and conditions
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Graduate PLUS FAQs
