The parent PLUS loan is a type of student loans. It’s designed for parents who want to help their children pay for college. The parent may take out a parent PLUS loan if they have good credit, a steady income and can make the payments on time. If you’re considering taking out a parent PLUS loan, there are many things you should know before signing any paperwork:
What is a parent PLUS loan?
A parent PLUS loan is a type of federal student loan that is available to parents of dependent undergraduate students. Parent PLUS loans are offered at a fixed interest rate of 7% and have no origination fee, unlike other types of federal loans such as Stafford, Perkins and Direct Subsidized Loans. The application process for Parent Plus Loans is similar to that for other types of federal student loans: you’ll fill out the Free Application for Federal Student Aid (FAFSA) online, which will determine your eligibility for any financial aid you’re eligible for; if you don’t qualify for enough grants or scholarships based on your income level alone then you may be able to borrow up to $20k per year through this program.
You can apply online at www.studentloans.gov or contact 1-800-557-7394.
Do parents pay back parent PLUS loan?
You may be wondering, “What if I don’t have the money to pay off my loans? Can I get a loan from my parents?” In the case of parent PLUS loans, the answer is yes–but only if your parents are able to pass a credit check and meet other requirements.
Parents can borrow up to the cost of attendance at their child’s school in this way, but there are some conditions: they must have good credit scores (above 700) and pass a screening process that looks at their income and assets before they’re approved for any funds. They also need to demonstrate an ability to repay their debts in order that they won’t become financial burdens on their children later on down the line.
Will parent PLUS student loans be forgiven?
Parent PLUS student loans are not eligible for forgiveness, discharge or cancellation. However, if your child is in default on his or her federal student loans and you are paying them back on their behalf, the parent PLUS loan may be eligible for cancellation after 25 years of repayment.
In addition to these options, parents can make payments directly to the lender at any time without penalty under an income-driven repayment plan such as Revised Pay As You Earn (REPAYE). This option allows parents with high income levels who have already paid off their own debt to help their children avoid defaulting on theirs by making monthly payments toward repaying their debt until it’s paid off completely
Is it good to take a parent PLUS loan?
It depends on your situation. If you are a good financial planner, then you will know if it’s a good idea for you or not. However, if you are not a good financial planner (like most people), then it’s probably not a good idea to take out this loan.
If your child is going away to college and they need help paying for school and living expenses while they’re away at school, then maybe getting a parent PLUS loan could be beneficial for both of you: The student gets the money they need to pay tuition and books; parents get peace of mind knowing their child has enough money for college without having to come up with all those funds themselves (and possibly ruining themselves financially). But remember that these loans have very high interest rates–as much as 7%–so keep in mind how much extra money this will cost over time before deciding whether or not getting one would be worth it!
What are the rules for parent PLUS loan?
- Parent PLUS loans are federal student loans for parents of current students and parents of students who have graduated in the past 60 days.
- Eligibility requirements include being a U.S. citizen or eligible noncitizen, having a valid Social Security number, and being either the parent or co-signer with your child on their student loan(s).
- You may be eligible for a Parent PLUS Loan if you meet all of these criteria:
- You’re borrowing money to help pay for college costs not covered by other financial aid programs (e.g., scholarships) or other funding sources such as grants and work-study jobs;
- Your child is an undergraduate student at least half time (6 credit hours per semester);
- Your annual income doesn’t exceed $65k per year if married filing jointly or $130k per year if single;
- You don’t have an adverse credit history (defaulted on previous debt obligations);
Conclusion
So, to sum it up, you should consider taking a parent PLUS loan if your parents can afford to pay for your education and you’re not eligible for other forms of aid. If you are planning on applying for one of these loans, make sure that you understand all of the terms and conditions before signing anything.
