Direct Parent PLUS Loans versus a Brazos Parent Loan

The Brazos Parent Loan

An affordable way for Texans to pay for their student's education

Many Texas parents use Direct Parent Plus Loans to pay for their dependent’s undergraduate education. The Direct Parent PLUS Loan is a “one size fits all program” where all borrowers, regardless of creditworthiness, receive the same interest rate and pay the same origination fee. This academic year, the Direct Parent Plus Loan has an interest rate of 7.00% and an origination fee of 4.264%.

The Brazos Parent Loan provides responsible Texans an alternative to the Direct Parent Plus Loan. With no fees and a low interest rate, the Brazos Parent Loan provides an affordable way for parents, family members or friends to help pay for a benefiting student’s undergraduate or graduate education. With our loan, your benefiting student can focus on their grades rather than student loan debt.

Compare the Brazos Parent Loan and Direct Parent PLUS Loan.

Brazos Parent Loan Federal Direct Parent Plus Loan
Lender Brazos Education Lending Corporation United States Department of Education
Borrower Any parent, grandparent, spouse, other family member, or friend of the student Biological or adoptive parent of the student (in some cases step-parents)
Interest Rate Variable rates from % to %.1 Fixed rates from % to %.1 Rates include the 0.25% Auto-Pay Discount. Rates are based on credit history and loan term selected. For the 2017-2018 school year, 6.75%, regardless of borrower credit history. Rate includes a 0.25% discount for automatic payments.
Origination/Disbursement Fees Zero fees Yes, the federal government charges Direct Parent PLUS borrowers an origination fee of 4.264% of the amount borrowed. The fee is deducted from the proceeds of the loan
How much may I borrow each school period? You may borrow up to Cost of Attendance, less other financial aid, as certified by the school. You may borrow up to Cost of Attendance, less other financial aid, as certified by the school.
What repayment terms are available? 5, 7, 10, 15 and 20-year terms are available.2 Standard Repayment Plan: 10 years
Graduated Repayment Plan: 10 years
Extended Repayment Plan: up to 25 years if you have more than $30,000 of Direct Loan indebtedness.
Are there any prepayment penalties? No. No.
Are there any interest rate reductions? Yes, a 0.25% Auto-Pay interest rate reduction is available for borrowers who sign up for automatic payments from a bank account.1 Yes, a 0.25% interest rate reduction is available for borrowers who sign up for automatic payments from a bank account.
Qualifying credit criteria Must have a FICO score of at least 720 (or 690 if applying with a cosigner), have a strong credit history and meet other credit requirements. No adverse credit history
When does repayment begin? Immediate repayment after the final disbursement on the loan is made. Immediate repayment after the final disbursement on the loan is made.
Is in-school deferment available on a parent loan? No. Repayment begins immediately after the loan is fully disbursed. Yes. Interest will still accrue during the in-school period and for 6 months post-graduation. Interest accrued during this time which is not paid is capitalized and added to the principal balance of the loan.
Is there a cumulative borrowing limit? You may borrow up to Cost of Attendance, less other financial aid, as certified by the school. You may borrow up to Cost of Attendance, less other financial aid, as certified by the school.
Eligible Degrees Available for undergraduate, graduate, medical, law and other professional degree studnets Limited to undergraduate students
Can a parent loan be transferred to a child? No No
Is a school certification required? Yes Yes
What interest rate types are available? Fixed and variable rate loans are available. Fixed rate loans only.
Is my interest deductible for tax purposes? Yes, your interest paid is deductible, subject to certain limitations. Please consult your financial advisor for deductibility in your particular situation. Yes, your interest paid is deductible, subject to certain limitations. Please consult your financial advisor for deductibility in your particular situation.
Is a portion of my interest subsidized? No. No. Unlike undergraduate Direct Loans, Parent Plus loan interest is not subsidized.
When does interest capitalize? Once upon entering repayment, and subsequently upon entering repayment after any period of deferment or forbearance. Once upon entering repayment, and subsequently upon entering repayment after any period of deferment or forbearance.
Can I pay interest on the loan before the loan is fully disbursed? Yes, you may pay interest on the loan prior to full disbursement. Yes, you may pay interest on the loan prior to full disbursement.
Is forbearance available? Yes, up to one year of forbearance is available in three-month increments. Interest will continue to accrue and will be added to the balance of the loan once the loan re-enters repayment. Yes, forbearance is unlimited but your servicer may set a limit on the maximum period of time. Interest will continue to accrue and will be added to the balance of the loan once the loan re-enters repayment.
Is loan forgiveness available? Yes, upon the death of the benefitting student, if the borrower dies and there is no cosigner, and if there is a cosigner, the loan will be forgiven only as to the deceased party. Yes, upon the death of the borrower or the student for whom the loan was taken, upon permanent disability of the borrower, or upon discharge by a bankruptcy court. There may be other circumstances where your loan may forgiven, please see studentaid.ed.gov for a complete list.

Please be sure to check out https://studentaid.ed.gov/sa/ for current information on all federal student loan programs.


BRAZOS RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. Brazos loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Program restrictions, other terms, and conditions apply. All loans are subject to individual approval and adherence to eligibility requirements and underwriting guidelines. Not all borrowers receive the lowest rate. If approved, your actual rate will be within the range of rates listed in this website and will depend on a variety of factors, including whether your loan has a fixed or variable interest rate, the term of the loan and your credit score. Rates and Terms are subject to change at any time without notice. Brazos loans are originated by Brazos Education Lending Corporation.

None of the information contained in this website constitutes a recommendation, solicitation or offer by Brazos or Brazos Higher Education to buy or sell any securities or other financial instruments or other assets or provide any investment advice or service.


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