Parent loans are educational loans that are taken out by parents for their children’s studies. These loans are similar to federal student loans and private loans. The key differential feature of parent loans is that parents or guardians can apply for the loans instead of students. The loans are paid back by the parents and not the students. Parent loans have been created for families who have difficulty in paying for their children’s higher education. The loan helps covers tuition costs and other educational expenses. The most popular types of parent loan is the parent PLUS loan, this is a federal loan. On the same hand, many private lenders offer parent loans as well. These loans are provided for graduate level students and undergraduates. Parent loans can be used to help cover outstanding tuitions costs and arrears if federal loans have been exhausted.
Federally disbursed parent loans such as the PLUS loan, has helped many families fulfill their Children’s academic goals. These loans offer a low rate of interest to increase affordability. The interest rate is fixed and is not affected by the market value; the rate is usually around 7%. The loan offers tax benefits and other discounts as well. Parent loans have been created keeping in mind the financial situation of parents, the loans also come along with great repayment schedules. Parents can repay once the loan has been disbursed or even enter a grace period of up to six months. You can apply for a Parent PLUS loans by submitting a FAFSA application. The application procedure is simple and easy.
On the other hand, private parent loans also come with major benefits. These parent loans can be attained any time throughout the year. A credit check for private loan may be necessary to determine if the family can repay the loan easily. The major disadvantage of private parent loans is that they offer a higher rate of interest as compared to parent PLUS loans, this rate may go up to 12%. However, private parent loans can be attained to cover all kinds of education related expenses such as boarding school expense, books, etc.