Financial Aid from a Parent
Options You Must Not Miss
Parents, education is expensive and we’re not just talking about college. You may also have elementary and high school bills, particularly if you are among the population seeking private school funding. You may be asking yourself:
- Where can I get affordable loans to help put my kids through college?
- Are there student loans for my kids’ K-12 education?
- Are there any student loans for parents that don’t require a credit check?
- Are there any student loans for parents with a poor credit history?
When you are at eye level with college tuition and all the student loans taken out by your college-bound kid don’t come close to the bottom line cost of a college education there is a solution designed just for parents.
Borrowing on the federal PLUS Loan for Parents is one of the best ways to finish financing your child’s college education. If your child is an undergraduate and a dependent:
You can borrow the balance of the cost of tuition with a PLUS Loan for Parents. Subtract from the full price for tuition the student loans and scholarships your child has already been awarded. The remaining balance is what you may finance. The PLUS Loan for Parents is part of the Federal Family Education Loan Program (FFELP). You’ll either apply through the Direct Federal Loan program or a FFELP lender. The college where your child is enrolling will use one or the other, so take their direction. Anticipate a credit check for this loan. If you have bad credit you may still qualify to borrow on the PLUS Loan if you can find a creditworthy co-signor.
PLUS Loans disbursed after July 1, 2006 are outfitted with a fixed interest rate:
- PLUS Loan interest rates through the Direct Loan program are 7.9%.
- PLUS Loan interest rates through a FFELP lender are 8.5%.
Repaying Parent PLUS Loans
You’ll have to begin repayment for the PLUS Loans as soon as funds are disbursed. When you applied for the loan you chose one of four loan repayment options: graduated, extended, standard, and income sensitive.
Should you face financial challenges that impede your loan repayment you may qualify for loan deferment, forbearance or you may be able to combine your loans into an affordable and practical consolidation loan.
Private Loans Help Parents Fund College and Private School
Private banks and student loan providers all typically offer a variety of private loans that may assist parents with key educational expenses, like college and private K-12 education.
Private education loans designed for parents are credit-based. If you have bad credit, again, try and secure a family member or friend with good credit that is willing to act as your co-signor. This is how you get the loans you need.
- Private loans for college parents: only finance absolutely what you need. What your child’s federal loans don’t cover should be managed with the federal PLUS loans we explained above. There may be high limits attached to private loans, along with variable and arbitrary interest rates all of which could get irresponsible borrowers in bankruptcy trouble.
- Private loans for private elementary and high school are similar. You’ll need good credit or a co-signor, but could be approved for the cost of tuition. Make sure you understand the interest rate, fees, and repayment requirements.
Remember, private parent loans are not the ideal way to fund your child’s college education. His or her federal student loans must be primary sources. This means you and your child must file a Free Application for Federal Student Aid (FAFSA).
Solutions for Parents with Bad Credit
If you are worried about your bad credit history, here’s a tip: you’ll have more chances qualifying for the federal PLUS Loans for Parents than you will getting a private educational loan—credit requirements are not as strict. But don’t let this stop you in your tracks—get a co-signor. A friend or family member with good credit could sign the loan agreement with you and solve your problem. Many loans offer a co-signor release once you’ve made a certain number of on-time payments. Here’s a chance to actually build credit or repair credit.
