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Parents can also take out education loans to help pay for their child's education. Also called PLUS loans.
To obtain this type of loan the student must also be a dependant of the borrower.
The federal Parent Loan for Undergraduate Students, also known as PLUS, lets parents borrow funds to cover any costs not already covered by the student's financial aid, up to the full cost of attendance.
Like Stafford Loans, PLUS loans are either FFELP - which are provided by private lenders, such as banks - or Direct - where funds are provided by the government.
PLUS loans are based on the 1 year T-Bill + 3.10%, so the rates may vary. PLUS loans are currently capped at 9%. The repayment of these loans begins 60 days after funds are released and the loans can have terms of up to 10 years.
The parent or guardian who obtains the PLUS loan is ultimately responsible for the payment. Even if the student agrees to pay for it.
When considering PLUS loans you should always look at all your options and make sure you make the best decision for your unique situation. Other options may include : cash out refinance, home equity lines of credit, or other types of loans. Be sure you take into consideration all the different scenerios in relation to your tax situation as well. For more information on loans in relation to your current tax situation please consult your local advisor, CPA, or financial planner.
Related Article:
PLUS Advantages >>
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