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Know more about parent loans

January 10,2012 by: Dallas Browne

Parent loans allow parents to borrow money to be used for college education of their children. In the US, it is parents can apply for PLUS loans. It can be granted to parents without other financial aid. Parents can easily qualify for this type of loan regardless of their financial situation. It can be used to finance appropriate education expenses including tuition fees, lodging, school supplies, computers and transportation costs. PLUS loans can also be taken by graduate students or professionals to support their education if they decide to go back to school or pursue higher degree.

Parents PLUS loans are often advantageous than any other type of student loan since it sets no limit as to the loan amount, provided it doesn’t coexist with any other financial aid. The interest rate of this type of loan is also more affordable at a fixed 7.9%. Aside from this, repayment comes in various options. Borrowers can also be qualified for tax deduction.

To be granted PLUS loans, eligibility requirements should be met. Among the requirements for applying for this type of loan is that the borrower should be the biological or adoptive parent of the student. But in some cases, the stepparents may also qualify. The beneficiary of the loan must be a dependent student who is currently enrolled half time at eligible participating school.   Before parents can acquire PLUS loans, they must also qualify for a credit check. But even if they wouldn’t pass the evaluation, they may still get the loan if a relative or friend agrees to endorse the loan application and shoulder payment if the borrower will not be able to pay anymore.

This type of loan gives the responsibility of payment to the parents but as soon as the student graduates from school and land a job, he can also share the responsibility of paying the loan. The government and other private organizations that offer parents loan are highly considerate of the paying circumstance of the borrowers, because they allow deferment or even cancellation depending on the unfortunate situation that the borrower comes across. Considerations include unemployment, poor economic state, death or disability. But all these circumstances must be proven accordingly.

To get a parents PLUS loan, the borrower should just submit a completed application form. Usually, upon approval, the money will be disbursed in two installments. The first installment will be used to pay for the student’s tuition fees. The other half will be given to the parent or child. The school has the responsibility to inform parents once the money is credited to them, since lenders send the funds directly to them. Repayment can be done for as long as 10 years. After 60 days from the full disbursement of loan, payment of the interest and principal begins. But parents also have the option to pay the interest after schooling but expect higher interest rates. Whatever option s they choose, the best thing to remember in acquiring loans is that it takes responsibility and commitment to be able to promptly repay it.

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