‣ What is a Parent PLUS Loan?
A Parent PLUS Loan is a loan that is provided by the federal government for Undergraduate Students and is also known as a PLUS loan. This loan is generally available through the Direct Loan program. This program allows parents and/or the legal guardian of the student to borrow money that will allow for the student to cover the costs that may not already be covered by the current student’s financial aid package and will help them in covering the full costs and expenses of attending college.
‣ Who makes Parent PLUS Loans?
As of 2010, all Parent PLUS Loans are made by the United States Federal Government. These loans are typically handled through the child’s college however, you may be able to find more info on these loans through the studentloans.gov. Through this site, you will be able to get a better idea of what is needed in order to qualify for the Parent PLUS Loan as where to apply for this type of loan.
‣ How much will a Parent PLUS Loan cost me?
At the time of writing this section, interest rates for Parent PLUS Loans are now market-based. What this means is rates may change through out the week, month, or year during the term of the loan similar to how you see mortgage rates changes. Parent PLUS Loans will have the rate set for the loan on or after July 1 each year. At the time the loan has been issued, the rate that you have received is locked in. One thing to note is that you may qualify for interest rate deductions on your taxes for qualifying low and middle-income families with Parent PLUS Loans.
‣ What are the advantages of a Parent PLUS Loan?
Parent PLUS Student Loans allow for a few different advantages that may be appealing to clients who look at this loan. Generally speaking, the interest rates for Parent PLUS Loans can vary annually depending on the type of loan offered. You do have the option to get both variable or fixed rate loans depending on the lender requirements. Another benefit of a Parent PLUS Loan is the offer of free insurance on the loan. What this means is the debt will be canceled if the parents or the student who took out the loan dies or becomes disabled.
‣ What are the downsides of a Parent PLUS Loan?
The one major downside of a Parent PLUS Loan is the fact that you are not able to declare bankruptcy on this loan. In fact, with all student loans, you will not be able to file for bankruptcy unlike how you can with mortgages or credit card debt. In extremely rare situations, you may be able to take your case to court.