April 9, 2010

Parent PLUS Loans are the Best Alternative

Posted in Parent PLUS Loans tagged at 10:08 AM by plusloans


If your child is in school, or will be entering school, the problematic financial aid “gap” between total cost of attendance and awarded aid can sometimes grow to a frustrating size. From personal experience at a private college in downtown Boston, I averaged about $7,000 to $10,000 in unmet expenses per year that had to be solved through alternate means.

There are a variety of options to handle this extra cost, including private student loans and personal loans, but based on feedback from parents and the economy, the best choice is a Parent PLUS loan. Here are a few reasons why this type of loan is more popular with families putting children through college:

1) They have a fixed interest rate.

In a turbulent and recovering economy, variable rate loans can be a ticking time bomb. Having fixed interest means that over the entire life of the loan, you will have stable payments and no surprises.

2) The credit check is easier to pass.

This one probably is debatable, but there is a general consensus that the credit check for Parent PLUS loans seems to be more relaxed than the inquiry most private banks use for private student loans. There have been many reports of parents who were declined private student loans being offered Parent PLUS loans, with sub-prime credit scores (620+) and higher.

3) They have flexible repayment plans.

This is arguably the best reason to take out a Parent PLUS loan versus a private offering. Between Income Based Repayment and several other very flexible and generous pay plans, the federal loan is a much more attractive option for most parents and families.

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5 Comments »

  1. Lisa said,

    Is there a limit to how many years the govt gives parents to pay off the Parent Plus loans? I see many private lenders put 15 yr cap on their loans

  2. joe said,

    Thats a nice info

  3. kim said,

    Parent Plus loans DO NOT have the option of Income Based Repayment as this article claims. The Plus loans that are taken out in the student’s name have that option, however Parent Plus loans do not!

    • Robert G. said,

      Good point Kim, with almost 85K in parent plus loans our option is to take a 2nd mortgage and wipe most of it out unless you know a better institution that offers a FIXED rate less than Direct Loans (Dept of ED).


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