What to do about parent plus loans?

Magdalena Schmitt asked a question: What to do about parent plus loans?
Asked By: Magdalena Schmitt
Date created: Fri, May 21, 2021 5:03 PM
Date updated: Mon, Aug 29, 2022 1:09 AM


Video answer: How to complete the parent plus loan application the step-by…

How to complete the parent plus loan application the step-by…

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How do you get a Parent PLUS loan?

  • If so, let’s go over the steps to apply for a Parent PLUS Loan. Step 1. Have your student complete a FAFSA. If you don’t know, that’s the Free Application for Federal Student Aid. It’s found on the Federal Student Aid website.

Video answer: 3 things you need to know about parent plus loans!

3 things you need to know about parent plus loans!

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It’s possible you could refinance those Parent PLUS loans through a private group. You as a parent are usually a pretty good candidate for refinancing and the chances of being approved are good. You could even find that refinancing lowers your interest rate. The interest rate on Parent PLUS loans is currently 7.21%.

Parent PLUS Loans can cover any remaining college expenses when no other funds are available. This makes them perfect for students whose scholarships, family contributions, savings, and other sources of aid don’t make ends meet. When Parent PLUS Loans Are a Bad Idea. A Parent PLUS Loan can also quickly become a financial risk.

A Parent PLUS Loan will enter default after 270 days of nonpayment. At that point, you could be facing wage garnishment, or having Social Security payments or tax refunds withheld to cover the debt. The best way to avoid those troubles is to steer clear of debt completely. The next best approach is to pay it all off as fast as possible. Is a Parent PLUS Loan a Good Option? Absolutely not!

Most Direct PLUS loans have fixed interest rates of 7.9%. Going forward, the new fixed rate (at least for now) is 6.41% with origination fees of just over 4%. Most distressing of all, parent PLUS borrowers are not eligible to repay through the income-based repayment programs.

Parent PLUS Loans are a useful option for parents looking to help their children pay for college. They’re relatively easy to get, and you can borrow as much as you need. But along with the benefits of Parent PLUS Loans also come some potential disadvantages, such as an origination fee and an interest rate that could be higher than one you could get from another lender.

A parent PLUS loan is a federal student loan, specifically a Direct PLUS loan, that’s offered to parents of undergrads. It offers flexible borrowing limits that let parents borrow up to their student’s full cost of attendance, covering gaps between offered student aid and costs.

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Video answer: Parent plus loans

Parent plus loans