Parent Plus Loan
Parent Plus Loan
The Federal Parent Plus Loan for The undergraduate Students enables parents and their family members with comparatively good credit history to pay the education expenses of each child who is a dependent undergraduate student enrolled at least half time in an approved college or university. Parent PLUS Loan are available through both the Direct Loan and FFEL programs.
Most of the benefits to parent borrowers are identical in Parent PLUS Loan. Families may borrow up to the total cost of undergraduate education including tuition, room and board, supplies, lab expenses, travel less any other aid.
Parent Plus Loan are non-need based, only credit rating based, which means that anyone can apply. Parent Plus Loan requires no collaterals unlike other loans. There is no penalty for early repayment, and consolidating Parent PLUS Loan after graduation is easy. Interest may be tax deductible under the Hope Education Tax Credit. Completion of the FAFSA Financial Aid Application may not be required.
Funds are usually disbursed quickly, during the first weeks of the semester. The primary benefit is that families can borrow federally guaranteed, low interest Parent Plus Loan to help pay for their child’s education, without needing to worry about collateral, need-based forms.
A parent loan can be used in certain ways: It can be a way to come up with additional money when you can’t afford the family share from current income and assets. It can alleviate a cash flow problem where one can come up with the family share but not by the time payments are due.
There are two types of parent loans – PLUS and Private.
The Federal Parent PLUS Loan is designed to supplement other forms of student aid. It’s available regardless of income or assets. The variable interest rate is capped at 9 percent. Parents can borrow to cover your total cost (tuition, room, board, books, and personal expense) minus financial aid.
There are flexible repayment options with as much as 10 years to repay. A minimal credit check is conducted. To qualify, the parent or the guardian only needs to demonstrate the absence of adverse credit. The application is easy to complete. Many lenders, including the College Board, offer online pre-approval for PLUS Loans.
A variety of lenders and other financial institutions offer education loans for parents to help pay educational costs. Generally, these loans carry higher interest rates than a Parent Plus Loan, so it is rather recommended that parents apply for a Parent PLUS Loan first before considering a private parent loan.
Private loans for parents are based on ability to repay, rather than on financial need, and require a worthy credit history. Parents of K–12 students who need help meeting their family share can apply for Parent Plus Loan through the College Board.