Parent Plus Loans for Your Child's College Education

2007-07-24 08:31:47

( Family )



The Prohibitive Costs of College Education

The costs of sending your child to college have continued to increase exponentially each year. You will expect to spend tens of thousands of dollars for a prestigious school or university. If you don't have enough savings to defray college expenses, you have several alternatives to choose from.

Your child can apply for scholarship grants or financial aid at the college or university he is enrolling in. Scholarships have stringent requirements that your child must be able to fulfill before he can be eligible. Furthermore, these scholarship programs do not fully cover all educational expenses of your child.

If scholarship or financial aid is insufficient or not possible, you can apply for a loan against your home equity or under your credit card account. These loans can charge high interest rates and generally have strict requirements regarding credit standing, collaterals and repayments.

Features of the Federal Parent Plus Loan

Federal parent plus loans provide low-interest loans to finance the costs of your child's undergraduate studies, including tuition, books and materials, room and board, and transportation. The interest rate is already fixed at a specific rate per academic year, and there are no variable rates.

Unlike other loans, Parent Plus loans require no collateral and no complicated formulas to determine the loan amount. As long as you do not have more than ninety days' overdue liabilities, bankruptcy or any other adverse credit records, you can easily qualify for a Parent Plus loan.

You can borrow an amount equivalent to the total expenses of your child's undergraduate education less any financial aid or grants he may be able to receive from the school.

Interest begins to accumulate from the loan release date. You should begin repaying the loan within sixty days of the release date. Your interest payments may be tax deductible, and there is no penalty for early repayment of principal. You should pay your Parent Plus loan within ten years.

How to Apply for a Parent Plus Loan

There are three ways to apply. You can fill out a Parent Plus loan application online. You can print a hard copy of the application form, fill it out and then mail it to the specified address. Or you can also dial the hotline and apply directly over the phone.

If possible, submit your most recent credit report, or pay a fee to secure a copy through Parent Plus website.

You will need to have your Parent Plus loan application certified or approved by your child's college. Some schools may also require you to fill out a free application for federal student financial aid or FAFSA form before certifying your Parent Plus loan application.

You can expect loan disbursement before the start of the first semester, either directly to you or to your child's school. The disbursed amount is already net of loan origination and guarantee fees.


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