Parents looking for a loan to pay for their children's education should consider the Parent Plus Loan. The Parent Plus Loan is administered by the department of education and offers parents the opportunity to borrow money to pay for their child's education. Parents can borrow the difference between what their child will receive in financial aid and the cost of college attendance. Many parents are borrowing this type of loan, since it offers favorable repayment terms and interest rates.
The interest rate for this loan is fixed at 7.9%, which is must lower then the interest rate on private bank student loans. The Department of Education is able to charge such a lower interest rate, since they're not out to receive a profit from their products.
Another fee that will come along with this type of student loan is an up to 4% origination fee for each disbursement. Parents have the opportunity to pay this fee each time or to include as part of the loan repayment. The fees will go towards the guaranty agency to help offset student loan costs.
Parent plus loan will begin to repay the Parent Plus Loan 60 days after the entire loan has been distributed or 6 months after their child has either graduated or is no longer enrolled as a full-time student. This allows parents more time to budget this monthly expense accordingly.
If you find that you are unable to pay the monthly repayment amount then there are many options to choose from so that you do not default on this loan. Many parents will request to postpone or defer payments under certain circumstances. You should contact your Parent Plus Loan lender to make arrangements to change your repayment options if you do find that you are unable to continue making payments.
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