Parent Student Loans

For students who are financially dependent, but their parents are not able to cover the cost of schooling on their own, the federal Parent PLUS loan can be a good option.

Federal Parent PLUS Loan

Parents and students alike should always look at the federal loan options available to them before turning to a private loan. This type of loan can be taken out if the student has met their federal loan limits or if their parent would rather take a loan out in their name than their child’s.

Eligibility:

• Good credit history
• The child is studying at least half-time

Details of the loan:

• Fixed rates (APR): 7.6%
• Variable Rates (APR): N/A
• Origination fee: 4.326%
• Type of credit check: hard only
• Repayment term: 10 years (or 25 years- graduated)
• Repayment options: partial in-school, full in-school, full deferral
• Grace period: 6 months after the student has left college

Preparations for Applying for a Parent Student Loan

1. First, look into whether you are eligible for a federal Parent PLUS loan, or whether a private loan would be a better option for you. 
2. Then, do you research and find out what the interest rates are for your options.
3. Decide what sort of a repayment plan you would like- consider how long you want your repayment term to be and how much you are willing to pay per month.
4. Consider whether you want the benefit of being able to defer payments until after your child has completed their education or not.

Then you can begin your search for a loan that meets all of your criteria.

When applying you will need certain information, it helps to organise this before you start so make sure that you have all of this to hand:

• School information- which one your child is enrolling at, what the cost of their course will be, and whether they will be receiving any other forms of financial student aid.
• Parent’s personal details- your credit history and score, driver’s license (or identification of another kind), and Social Security number.
• Parent’s employment details- information about your employer, evidence of your income and your 1099 statements.

Information About Repayment of Parent Student Loans

There are several options for repayment which parents can choose with federal and private parent student loans. While some require almost immediate repayments, others allow you to defer payment until your child has completed their schooling. 

Also, you can refinance a Parent PLUS loan, putting it in your child’s name once they have graduated if both parties agree and the child is eligible and qualifies for a loan themselves. A lot of parents choose this option as it protects their child’s financial record.