What are parent plus loans? They are loans that parents can take out to help their children finance college or other educational expenses. These loans can be deferred until the student graduates from college or drops below half-time enrollment. Once approved, parents can choose the repayment plan they prefer, such as a standard plan with fixed monthly payments, a graduated plan based on the student’s income, or an extended repayment plan with lower monthly payments and a longer repayment period. To qualify for a Parent PLUS loan, the student must fill out the Free Application for Federal Student Aid (FAFSA). For an applicant to be eligible for a Direct PLUS Loan, the parent must be biological or adoptive. In some cases, a stepparent may also qualify as a parent.
The parent PLUS program was originally designed to help middle and upper-class parents afford the rising cost of college. However, since tuition costs were increasing and interest rates were sky-high, the government decided to make it available to middle and upper-income families who could not afford college tuition. So, in 1978, the program was created to offer middle-class parents a way to afford school without a massive loan. As a result, more parents are using the PLUS program to help their children pay for school.
To qualify for a Parent PLUS loan, a parent must be at least 25 years old, be the beneficiary of a trust, and be attending an eligible school at least half-time. Additionally, the parent must not have an adverse credit history or a student endorser. The parent must also meet federal school aid eligibility requirements. The parent PLUS loan is a good option for parents who need help paying for their children’s education.
Parent PLUS loans are not dischargeable in bankruptcy. They also do not have the desirable features of a regular student loan, such as income-based repayment and deferment for medical disability. In addition, many parents apply for these loans in the late stages of their careers. These factors make them more difficult to repay, which is why they are not considered the primary source of college funding. And if you are unsure whether a Parent PLUS loan is right for you, it is best to seek a debt consolidation plan and apply for a federal student loan.
A Parent PLUS loan is free to apply for, but you can’t consolidate it with a child’s federal student loan. You can, however, refinance a Parent PLUS loan with a private lender. While this process will require more information, it will also allow you to choose the loan terms and interest rates you prefer. In addition, it can build credit and save you money. So, what are Parent Plus loans? There are several reasons to consider a parent PLUS loan.
One of the best benefits of a PLUS loan is that it allows you to borrow a large amount of money. It will cost your child less than an undergraduate student loan and will be easier for you to repay. However, because PLUS loans are private, the interest rates will be higher than for federal loans. You’ll also be able to defer payments if your income fluctuates. When choosing a private loan, research the terms and interest rates.