Parent Loan for Undergraduate Students
Private Student Loans
Get Money When You Need It Most
The Best Private Student Loan May Surprise You
If you need a loan to pay for your son or daughter’s college education, then the best private student loan isn’t really private at all – it’s the
Federal PLUS program. Through this program, parents can borrow money through this government program if their child qualifies as a dependent and if he or she is at least a half-time college student.
Facts about the PLUS Loan Program
To borrow money through the program, parents have to complete a Direct
PLUS loan application and promissory note which are available through the Student Aid on the Web site or through the financial aid offices of most universities. Generally, students should have completed the
FAFSA (Free Application for Federal Student Aid) in case they qualify for grants or other types of financial aid which can mean you will have to borrow less or even none at all.
Parents applying for PLUS loans do have to pass a credit check. This is a different requirement than for students. Any student with a financial need can qualify for federal student loans. Private education student loans also require applicants – either parent or student – to pass a credit check. If you do not pass the credit check, then you can usually add a co-signer to the loan. For some parents who need private student loans but have bad credit, other options may be more feasible.
One of the benefits is that the PLUS program provides fixed rate private student loans. Currently, the interest rate is either 7.9% or 8.5% depending on the type of loan you take out. However, unlike some student loans, PLUS loans begin accumulating interest from the date of the first disbursement (when the money is first paid out to the school or student).
Other PLUS Loan Details
There are some drawbacks to using PLUS loans. For one, you do have to complete quite a bit of paperwork and go through a credit check. Although the interest rate is decent, if you have good credit you would probably get a better deal going through a private lender or borrowing on the equity in your home.
Parents are also limited in how much they can borrow for their children. Only the cost of attendance with all other financial aid deducted can be borrowed. Plus, you’ll need to start paying back that loan faster than you would with other student loans. Instead of six months after leaving school, these loans start becoming due 60 days after the initial disbursement.
The bottom line is that many parents may be better off taking out a
private alternative student loan instead of going through the
PLUS program.
Advantages of a Private Student Loan
- Get a check sent directly to you
- No payments required while you are in school²
- Apply online in minutes
- Borrow up to $40,000 per year¹
- Preliminary approval in as little as 15 minutes
Private Student Loans are subject to credit approval,
receipt of a completed and signed Application/Promissory Note and
verification of student's enrollment at a participating school.
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