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Parental Student Loans

When facing the daunting task of sending a child to college, the cost is still the most frightening issue to face. The thought of coming up with the cash to fund the education is painful, and aside from the fact that a college student generally cannot fund even a portion of his or her own bill, parents are often strapped in terms of available finances. Fortunately, the federal government offers parental student loans such as the PLUS loan, and several other agencies provide alternative parental loans to help ease the burden of funding one or more 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, so repayment begins immediately upon disbursement of the loan, just like a traditional loan. Also, like traditional loans, the parents will be submitted to a credit check. However, like other federally funded loans, the PLUS loan offers very low interest rates and long term repayment periods.

Of course, 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 an alternative loan. In fact, even getting a PLUS loan may be out of reach for individuals with truly bad credit. However, credit requirements are more relaxed for federal governmental loan purposes, since the main objective is to help as many students as possible attend college to improve society, whereas the sole purpose of a bank loan is to profit from the loan. 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.