In today’s world with the cost of college education being so high it is not uncommon for a college student to need a loan to help pay the expenses. When looking into financial aid usually student loans are a last ditch effort to help set off the costs. However, if you happen to be a parent of a student who is attending college you can consider taking a parent loan to pay for the expenses.
When To Consider This Option
When the parents of a college student know that they cannot meet the estimated family contribution that is stated on the student aid report they will often consider using a government college loan. The number that is needed is calculated based on the information entered onto the Free Application for Federal Student Aid (FAFSA). If the parents do not have enough money to pay there is no need to worry. There is another option for you. This option is called the PLUS bad credit personal loan.
What Is The PLUS Loan
The PLUS loan stands for Parental Loans for Undergraduate Students. This loan has been put into place to help parents who need the extra funds to help pay for the financial aspects of their student college expenses.
These PLUS loans are given to borrowers through financial lenders such as traditional banks and credit unions. In this comparison they work just like the Stafford loan. The only different between the Stafford loan and the PLUS loan is that the PLUS loan is paid directly to the parents and not the students.
A PLUS loan is not given or approved based on the financial need. Any parent that needs help with the college education costs can apply and possibly receive this type of loan. These loans are also available for parents who just want to be able to give their college student some incidental expense money during the school year.
The amount of money that can be borrowers can be as much as the entire cost of the college tuition for that year. The amount will be figured after subtracting the amount of other grants or scholarships that the student has already received.
Interest Rate
The interest rates on a PLUS loan is much higher than other types of loans. The interest rate is also not a fixed rate it is a variable rate which can reach as high as nine percent. There are also other fees that are involved so the borrower should check into all charges and fees before singing the loan so that there are no surprises in the end.
Requirements
There are certain requirements that parents must meet to be eligible to apply for the PLUS loan. The first is that the student should be attending the school at least half of the time if not full time. The second requirement is that the parent should be a legal guardian of the student. The third requirement is that the borrower cannot be in default on any other loans. There is a credit check that they will need to pass to be approved. The last requirement is that the student should be a United States citizen or have the qualifications to be in the United States legally.