What are parent loans?

A parent loan is money a student’s parent or guardian borrows to help pay for school. The loan is entirely in the parent’s or guardian’s name and they are taking full responsibility for repaying the loan. There are two parent student loan options: Federal Direct Parent PLUS Loan. Private Parent Student Loan.

Are Parent PLUS loans bad?

Parent PLUS loans have some major flaws. High interest rates and the lack of subsidies can make them very expensive to repay. And repayment options are much narrower than they are for most other types of federal loans.

What’s the difference between parent PLUS and private student loans?

Parent PLUS Loan vs. Private Student Loan. The Parent PLUS Loan, which is a federal student loan, offers flexible terms and a standard fixed interest rate. However, private student loans may be preferable to parents who have very good or excellent credit, although repayment options may be more limited.

How are student loans different from other types of loans?

How student loans are different than other types of loans. In general, private student loans have lower interest rates than personal loans. They can also offer the choice of a fixed or variable interest rate. A personal loan usually only offers a fixed interest rate, which can impact the amount of your payment.

Which is better, a personal loan or a student loan?

Some personal loans explicitly state they should not be used for post-secondary education or student loan debt. In general, private student loans have lower interest rates than personal loans. They can also offer the choice of a fixed or variable interest rate.

Are there student loans for parents of undergraduates?

One accessible source of funding for families can be parent PLUS loans, which are federal student loans for parents of undergraduates. Taking on new debt is a decision to think through carefully. Here’s what you need to know about parent PLUS loans to decide if they’re an affordable way to meet your college funding needs.