Parent Loans

Parent Loans
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Parents of dependent students attending college and university may not have the resources to finance their children's education through college. The savings and income which they earn may not be enough to pay for the total cost of education. After exhausting grants, scholarships and work-study options the parent might turn to Parent Loans to give their children a great chance to pursue their dreams. A student may have worked all through senior school to attain high grades to go to university to pursue a degree.

The parent can apply for a PLUS loan for parents through the Direct Loan Program. The interest rate is 7.9%. The loan starts accruing interest after the first payment is disbursed to the school in full. The repayment starts 60 days after this payment but the parent can apply for deferment or forbearance as long as the student is on half-time enrollment and during the 6-month grace period.                                                                                                                                                                                           
Parents may apply for Parent Loans to cover the entire time the student will be in school. The interest rate on the loan is fixed. The loan can be used to pay for tuition and fees, room and board which the parent has to agree and books, transport or to buy a computer.

The parent must fill a Direct PLUS Loan Application and also a Master Promissory Note committing himself/herself to pay the loan, interest and fees. The advantages of borrowing the PLUS Loan are that-:

- The parent can apply for the cost of the undergraduate's entire attendance minus any financial aid granted in form of grants, scholarships and work-study. The loan is paid for one year and the parent will need to fill a Loan Request every year of school.
- Loan Repayment Plans are flexible and range from10-25 years. The borrowers can change from one option to another depending on their financial situation.
- No collateral is required for a PLUS Loan
- The interest paid or accrued may be tax deductible
- PLUS Loan Consolidation is available and the parents can consolidate with their own Stafford Loans but not with the dependent's loans. 
- Parents have online access to their Direct Loan information

To be eligible the credit history is checked and other conditions like bankruptcy, re-possession and foreclosure which affect eligibility.

The U.S. Department of Education releases the Parent Loans to the school in two installments. The remainder may be paid to the parent unless he/she authorizes it to be credited to the student's school account or to be paid to the student who is issued with a check.
Parent Loans can be sourced from banks and financial lenders like Wells Fargo where the parent has an account.  They give Parent Loans to credit-worthy borrowers. The credit history is rated and the debt-to-income checked. The parent with poor credit history can apply with a co-signer. A family or a friend who is willing to be a co-signer will be released after several on-time payments depending on the lender's terms.

Last modified onTuesday, 02 April 2013 16:06
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