Parental Student Loans

The thought of sending your child to college can be daunting, especially since young college students usually cannot fund even a portion of his or her own bill. Fortunately, the federal government offers parental student loans such as the PLUS loan, while several other agencies provide alternative parental loans to help ease the burden of funding your children's college education.

Because the PLUS loan is for parents and is not considered the financial responsibility of the student, there is no deferment period. This means repayment begins immediately upon disbursement of the loan, just like a traditional loan. Parents can expect to be submitted to a credit check, but fortunately, the PLUS loan offers very low interest rates and long term repayment periods.

Many private banks and organizations also offer parental student loans that are similar to the terms of the PLUS loan. In fact, many of these institutions act as a liaison for the PLUS loans and can modify the program to offer additional benefits and better interest rates. If you do seek a loan from a traditional lender, make sure they have specialized student loan programs so that you are not paying the high interest rates reserved for a standard personal loan.

For parents with less-than-perfect credit, it may be difficult to obtain a PLUS loan or an alternative loan. However, credit requirements are more relaxed for government loans. The main objective in federal aid lending is to help as many students as possible attend college with the hope of ultimately improving society, whereas the sole purpose of a bank or private loan is to make a profit from the borrower. Therefore, even with bad credit, you are more likely to qualify for a PLUS loan than an alternative loan.

Paying for school is not easy, but we are here to help. OEDb's student finance section will help you find the money you need to pay your tuition and other college expenses. We cover scholarships, college grants, and student loans. Scholarships and grants are both forms of "free money", meaning they don't need to be paid back. Scholarships are typically awarded by businesses or individuals, with the money being earmarked specifically for tuition. They can be awarded based on a student's location or by religious affiliation, such as Catholicism or Islam. Grants are typically awarded by governments or non-profit organizations and the money often can be applied to several different expenses a student may incur, not solely tuition. They can be awarded based on location or ethnicity, for instance African American or Hispanic. Loans are not considered "free money", because unlike scholarships and grants, they do need to be paid back after graduation. Common federal loans include Perkins and Stafford. Loans are also available by location.