Private Student Loans Blog

Because getting a college education is a big responsibility and an expensive proposition, finding the right financial help to sort through this process is very important. If you are a parent and your son or daughter has exhausted grants, scholarships, and federal funded student loans, you may be able to step in and help with a Parent PLUS loan. The original name of this particular kind of loan was the Parent Loan for Undergraduate Students. However, this phrase is no longer used but the acronym stuck. These loans are funded in one of two ways. They are offered by private lenders and through Federal funding. This type of loan allows the parents to borrow the full cost of the tuition less any amount already provided through scholarship, grants, and financial aid directly to the student. An 8.5% fixed interest rate is charged for the loans and you must begin paying on the loan 60 days after it is funded. If, however, the parent is also a college student, he or she can apply for an in-school deferment which means that the repayment will begin after the parent finishes college. It is also interesting to note that the Parent PLUS loan can be consolidated with any loans he or she has for their own college tuition. However, the PLUS loan can not be consolidated with any student loans the child has for the college expenses. This is because the borrowers are different people. If you have decided to take out a PLUS loan for your student and you have agreed that your child is supposed to be responsible for its actual repayment, you need to be aware that if the child doesn’t pay on the loan, the parent will need to pay the loan since he or she is the owner of the loan. While the repayments are supposed to start 60 days after the credit is extended, if the parent has economic hardship issues, the PLUS loan may be fully or partially suspended for one year. This suspension of the loan may happen up to three times but it is at the discretion of the lender after reviewing the borrowers debt burden and making a decision based on the those findings. Because we want our children to succeed, we sometimes push the limits of what we can do for them. This Parent PLUS loan enables parents to take an active role in their child’s higher education. You can contact your student’s school financial aid office to find out more about this loan and how it can help you help your student.