Federal Parental Loan For Undergraduate Students (PLUS)
The Federal PLUS Loan enables parents or legal guardians to finance their dependent (as determined by the FAFSA), undergraduate student’s post-secondary education by borrowing funds directly from the government through the William D. Ford Direct Loan Program. In order to be eligible for the PLUS loan, apply for FAFSA.
This loan is insured by a guarantee agency and backed by the federal government. Although financial “need” is not required, credit worthiness is considered. Parents can take out up to the cost of attendance, minus any other aid. Contact SDC’s Student Financial Services Office at (619) 201-8730 for a detailed cost estimate.
If one parent is denied the PLUS loan, and no creditworthy co-signer is found, the student may be eligible for additional Stafford Unsubsidized loan money. Once the Student Financial Services Office is informed of the denial by the lender (and/or the parent), a revised award letter is sent to the student for approval.
Also, check out the following websites for parents:
If the PLUS loan option is not possible, the student may apply for an alternative loan. An alternative loan is a private loan, funded by an outside lender—not the federal government. These loans serve as “alternatives” to the Stafford and PLUS government loans. These loans are to be used for educational purposes only and are to cover the student’s outstanding balance and/or educational supplies. Any student who has an outstanding balance, is on Financial Aid suspension, or is enrolled less than ½ -time may be eligible for an alternative loan.
Alternative loans are in the student’s name and are based off of their credit history and a co-borrower’s credit history (if applicable). It is best to apply with a credit worthy co-borrower as it may help lower the interest rate. For these loans, a student may only take out up to the cost of attendance minus any other aid received. The student should contact SDCC’s Student Financial Services Office at (619) 201-8730 or log onto Empower Web for a detailed cost estimate when trying to determine the loan amount to apply for. Also, please note that some lenders require you to make satisfactory academic progress (SAP). In this case, if you do not make satisfactory academic progress throughout the academic year, you may need to apply for an alternative loan with a lender who does not have SAP as a criterion for receiving a loan.
Although alternative loans have different repayment options than government loans they may be reasonable for the student, depending on the outstanding principal balance. Alternative loan repayment can begin from 6 to 9 months after the student graduates, leaves school, or drops below ½ time enrollment. The minimum monthly payment is usually $50, depending on your outstanding principal balance. Contact the lender to view their repayment options.
Federal Tax Benefits
The Federal government provides a number of tax breaks for college, including credits, deductions and tax-free income. Tax-law changes in recent years have added and expanded higher-education tax benefits. All have income limitations and other restrictions. Please refer to the IRS Publication 970 titled “Tax Benefits for Education.” It can be found on the IRS website.
Benefits include: Student-loan interest deduction, Hope Tax Credit, Lifetime Learning Credit, Deduction for higher-education expenses, Employer-provided education benefits, 529 college savings plans, and Coverdell Education Savings Accounts and others.
Federal Perkins Loan Program
The Federal Perkins Loan Program is designed to assist students who have a substantial amount of remaining need after other aid including Stafford Loan availability has been utilized. Interest is fixed at 5%. Repayment of principal and interest begins nine months after a student ceases to maintain at least half-time enrollment.
Home Equity Line of Credit
Some home owners decide to borrow for college using the appraisal value of their home. Contact your mortgage company for more information.
As always, we applaud and encourage students to apply for scholarships. The links below can help assist your scholarship search. Make sure to check with the financial aid office to find out how an outside scholarship will affect the students financial aid award.