A Beginner’s Guide to Parent PLUS Loans

It can be expensive to pay for a college education. Student loans are one way for families to pay for college costs like tuition, books, housing, and more. But what happens when your family needs more money to pay for school than the Federal Direct Loan limits allow?

A Parent PLUS loan is one choice. We’ll talk about what Parent PLUS Loans are, how to apply for them, their pros and cons, and how to get started with them.

How Parent PLUS Loans Work:

The parent of a college student can get a federal student loan called a Parent PLUS loan to help pay for school. The federal student loan program includes the Parent PLUS loan. These loans are taken out only in the parent’s name, and it is the parent’s responsibility to pay them back in full.

Can I get a PLUS loan for parents?

The student’s parents must take out a Parent PLUS Loan. To be considered a “parent,” someone must be the student’s biological parent or the adoptive parent. Parent PLUS Loans can’t be taken out by grandparents or legal guardians, even if they raised the student most of the time or are the guardian now.

Parents will also have to meet some simple requirements about their credit, which will include a check for any bad credit history. Some accounts that are late or overdue on your credit report are part of a bad credit history. It can also mean that any Title IV debt (debt from a previous federal education loan) has been in default, discharged in bankruptcy, foreclosed on, repossessed, put on a tax lien, garnished, or written off in the last five years. A parent can get a Parent PLUS loan if they fill out an application and have their credit checked. Both parents can still apply separately, and even if only one parent qualifies for the loan, the student can still get help.

For a Parent PLUS Loan to be possible, the student the loan is for must also meet the general requirements for getting a student loan. They will have to show that their child is enrolled at least half-time in an eligible school and is a US citizen or an eligible noncitizen. You can apply for a Parent Plus Loan if you meet all three of these requirements.

How do I apply for a PLUS loan for my parents?

The first step to getting a Parent PLUS loan is to fill out the FAFSA®, which stands for the Free Application for Federal Student Aid. After filling out the FAFSA, the next step is to fill out an application for a Direct PLUS loan. The Federal Student Aid website is where you can find both of these applications.

How much do Parent PLUS loans cost in interest?

The interest rate on a Parent PLUS loan stays the same for the whole loan term. Every year, the fixed interest rate can change. From July 1, 2022, to July 1, 2023, the interest rate on Direct PLUS Loans is 7.54 percent.

What are the good and bad things about PLUS loans for parents?

What’s good:

The Interest Rate That Is Set. Some student loans, like many other kinds of loans, have interest rates that change with the market. But the interest rate on a Parent PLUS loan will stay the same for the whole length of the loan. Even if interest rates go up, you won’t have to worry about your loan’s interest rate going up because it will always be the same.

You can pay for the cost of going. Federal Direct Loans have limits on how much a student can borrow each year. Parent PLUS Loans, on the other hand, let parents borrow up to the student’s school’s cost of attendance minus any financial aid received.
There are a few ways to pay back the loan. In general, parents can use any of the following plans to pay back their loans:

Standard repayment plans: Pay the same amount every month for 10 years.
Plan for paying back over time: Start with small payments that get bigger over 10 years, until the debt is paid off.
Extended repayment plan: Pay fixed payments or payments that change over 25 years.

The Bad:

There’s a fee for starting the loan. When you take out a Federal Parent PLUS Loan, you have to pay a fee called a “origination fee.” The origination fee is 4.228% right now. If you took out a loan for $20,000, you would pay about $845 in fees.

There is a credit check that must be done. A credit check is done to make sure you don’t have a bad credit history. If you do, you will need to apply with a person who can co-sign for you and is eligible to do so.

Payback starts right away. Most student loans let you put off payments until after you graduate, but Parent PLUS Loans must be paid back right away. Parents who aren’t in school pay back the loan, so repayment starts right away. But you might be able to get your loan payments put off while your child is in school and for six months after they graduate.

Other Options for the Federal Parent PLUS Loan

One way to pay for college costs is with Federal Parent PLUS Loans. Even though it can be very helpful to be able to take money out for your child, Federal Parent PLUS Loans don’t give you a lot of freedom. So, if you aren’t sure if a federal PLUS is the right choice for you, here are some other options:

Private Parent Loans: A parent loan for college doesn’t have to come from the federal government. There are many things that private lenders can offer that can make a parent loan appealing. At College Ave, you can choose between fixed and variable interest rates for Parent Loans, so you and your student can get the best deal. We also offer flexible ways to pay back the loan, which makes a private parent loan an attractive way to pay for school. And most lenders don’t charge a fee to start the loan.

Co-signing a student loan doesn’t mean that the parents have to get the loan on their own. Parents can also cosign on a student loan to help their kids pay for school, but both the student and the parent are responsible for paying back the loan. Some private lenders may let you get rid of your cosigner if you meet certain requirements. Check if this is important to you before you get a student loan.

Getting a private loan for parents

College Ave can help you get a private parent loan if you need one. We have private parent loans that are flexible and can help you pay for college. Here are some important things about our parent loans:

Pick the type of interest rate you want. With a fixed-rate loan, you won’t have to worry about rates going up or your payments changing. If you want, you can also get a parent loan with an interest rate that changes over time.

Choose a flexible plan for paying it back. You get to choose how long it will take you to pay back the loan. We have plans that are flexible and will work with you to find a monthly payment that fits your budget.

We walk you through the steps of getting a loan. We won’t just give you money; we’ll also help you understand the process and figure out how to pay it back. We have you covered every step of the way, from our parent loan calculator to our pre-qualification tools.

There’s no fee to start the loan. You don’t have to pay an origination fee to apply for a private parent loan through College Ave.
Parent PLUS Loans are loans that parents take out to pay for their children’s college costs.

The loans are taken out in the name of the parents, and it is their responsibility to pay them back. With these loans, your student can go to college without having to worry about money.

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