Parents looking for a student loan at an affordable interest rate should consider a Parent Plus Loan. This loan is for any parent who has a child attending college and pursuing their first undergraduate degree. Many parents don’t have enough money saved for their child to attend the school of their dreams, so they take out personal loans or max out on their credit cards to cover the difference between the amount of money they’ve saved to the cost of attendance. This could cause parents to have unnecessary high interest rate loans and ultimately causes parents to have more financial stress and tension.
Many parents don’t realize that the federal government offers a student loan where parents can borrow a loan specifically designed to help them put their children through college. This Parent Loan, also known as the Parent Plus Loan, offers very attractive fixed interest rates and favorable repayment options and is administered through the Department of Education.
The Parent Plus Loan offers loans to parents up to the difference between what their child will receive from financial aid and the cost of attendance. The Direct Parent Plus Loan offers an interest rate of 8.5% fixed for the entire repayment term. This is a much lower interest rate when compared to other private bank and payday student loans, since the Department of Education is a federal non-profit government agency. Parents are required to pay an additional 4% origination fee for each loan disbursement, which is used to pay for the costs to run the financial aid program and the guaranty agency services.