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Parent Loan for Undergraduate Students (PLUS)
The PLUS Loan, although technically not a subsidized loan is a program where the rate is capped which makes PLUS rates attractive compared with rates on many private education loans. Interest rates on PLUS loans are variable and are adjusted annually on July 1, but rates on new PLUS loans can never exceed 9 percent.
PLUS Loans enable parents with good credit histories to borrow to cover any costs not already covered by the student's financial aid package, up to the full cost of attendance of each child who is a dependent undergraduate student enrolled at least half time. Like the Stafford Loan, PLUS loans are either FFELP (provided by private lenders, such as banks) or Direct (funds provided by the government). Most of the benefits to parent borrowers are identical in the two programs.
PLUS loans have variable interest rates (based on 52 week T-bill rate + 3.10%) capped at 9%. Repayment begins 60 days after the funds are fully disbursed, and the repayment term is up to 10 years. Some lenders offer a slight discount for automatic payment plans. PLUS loans are the financial responsibility of the parents, not the student. The interest payments for the first 60 months of repayment on all private and government backed student loans, including PLUS is deductible. The maximum deduction is $2,500 in 2001. For more information on the PLUS and other loans, see the Education Resource Center section on Learning the Language and Understanding the System.
The Health Professions Student Loan (HPSL) Program
HPSL is similar to the Federal Perkins Loan except it is sponsored and regulated by the Federal Department of Health and Human Services (DHHS). With a 5% interest rate, as with the Perkins program, the Federal Government supplies most of the money; and the institutions are responsible for directly administering the program.
The HPSL program is used to encourage greater participation of disadvantaged populations in the health professions and to increase the number of primary health care providers. Schools of allopathic medicine and osteopathic medicine have phased their HPSL funds into Primary Care Loan (PCL). With this transition, new borrowers must train and practice as primary health care physicians.
Applicants must meet all eligibility requirements for federal education loan programs. The student must be enrolled in good standing or accepted for enrollment as a full-time student in a health professions school (allopathic medicine; osteopathic medicine; dentistry; pharmacy; podiatric medicine; optometry; or veterinary medicine).
Although all graduate students are considered independent according to the need analysis formula, in determining financial need for HPSL, institutions must take parents' information into account for the purpose of awarding HPSL funds. This requirement cannot be waived unless the parents are deceased. .
The amount of HPSL funds awarded to a student plus the amount of the student's expected family contribution--including parents' contribution--may not exceed the student's cost of attendance. Allopathic and osteopathic medical schools can increase awards from HPSL, Loans for Disadvantaged Students (LDS) and Primary Care Loans (PCL) beyond the cost of attendance annual maximum limit for third- and fourth-year students. The over awarded funds must be used to repay outstanding balances on loans with less favorable terms taken out while the borrower was in attendance at that school.
The grace period for a HPSL is one year long during which repayment of principal is not required and interest does not accrue. Interest is computed on the unpaid principal balance and begins to accrue upon expiration of the grace period unless a borrower is eligible for deferment status.
A deferment period on an HPSL means that interest does not accrue and the borrower does not have to make payments on the loan. Deferments are only available for participation in certain activities such as: active duty in the uniformed services (up to 3 years); Peace Corps volunteer (up to 3 years); advanced professional training (unlimited); leave of absence to pursue related educational activity (up to 2 years); training fellowship, training programs and related educational activities for graduates of health professions schools (up to 2 years). Deferment periods do not count against the borrower's right to repay the loan within 10 years. Deferments are not automatic. Borrowers then must file deferment forms annually for each additional year of deferment.
Insurance premium, may not exceed 6% of the loan amount disbursed to the student may be charged.
The repayment term is not less than 10 years or more than 25 years. Late fees cannot exceed six percent of the installment payment. HPSLs may be canceled because of the death of the borrower, or because the borrower has become permanently and totally disabled.
Nursing Student Loans
This program is sponsored by the Federal Department of Health and Human Services (DHHS), Bureau of Health Professions (BHPr). Nursing student loan funds are allocated and awarded to eligible participating schools by the Department. Funds are made to schools of nursing to capitalize loan funds.
Students apply through their school student aid office. The schools then tabulate requests for funds based on the estimated needs of students and then make awards. The awards range from $500 to $4,000 with an average award of $1,830. Loans have a maximum of $2,500 for an academic year, $4,000 for each of the final 2 years, or the amount of the student's financial need, whichever is less. The total is limited to $13,000.
Nursing students who are citizens, nationals or lawful permanent residents of the United States or the District of Columbia, the Commonwealths of Puerto Rico or the Mariana Islands, the Virgin Islands, Guam, the American Samoa or the Trust Territory of the Pacific Islands, the Republic of Palau, the Republic of the Marshall Islands, and the Federated State of Micronesia are eligible.
For more information, contact: The Division of Student Assistance, Bureau of Health Professions, Health Resources and Services Administration, Public Health Service, Department of Health and Human Services, Parklawn Building, Room 8-34, 5600 Fishers Lane, Rockville, MD 20857. Telephone: (301) 443-4776.
Use the Education Resource Center’s Paying for College – Seven Step Approach to Paying for College to create, organize and execute your plan to pay for college. Link to Seven Step Approach
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