PLUS loans are an excellent source of funding for parents that wish to pay for their children’s education. Offered by the federal government in conjunction with the United States Department of Education, PLUS loans are available to parents and guardians depending upon their credit history and other factors. PLUS loans feature a fixed interest rate of only 7.9%, making it easy for parents to pay for college. However, there are some other important and unique features of a federal PLUS loan:
1.) PLUS loans relieve students of financial burden. Because PLUS loans are obtained based upon a parent’s credit standing, there is no financial responsibility on the part of the student. This leaves students free to concentrate on their academic performance.
2.) PLUS loans can be used to pay for anything educational-related. This includes tuition, transportation, books and lab fees, health insurance and basic living expenses. This means that parents can fund the entire cost to put a child through school. As with most features of the PLUS loan, the idea is to permit the student to study in a manner that eliminates financial stress, which will ideally allow them to perform at their peak.
3.) PLUS loans feature unique repayment plans that can be tailored to meet a borrower’s needs. While payments do begin at the time of disbursement, there are many other options that are available to parents who obtain a PLUS loan. In fact, parents are often able to get similar benefits as those that students are entitled to with Stafford or Perkins Loans, such as payment forbearances, temporary reprieves, and deferments.
PLUS loans should not be confused with federal consolidation loans, so if you have multiple educational loans already you may want to consider something other than a PLUS loan. But if you are seeking the best, lowest cost option to fund your child’s education, there are no better options than PLUS loans.
Need to know exactly how much interest you'll pay over the life of a PLUS loan?
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