Pros and Cons of Parent PLUS Student Loans


Several types of loans are offered to students by the federal government. Among them is the type known as Parent PLUS. As the name suggests, parents are a key part of this variety of loans as they are actually given to parents as opposed to students.

While there are some situations in which a Parent PLUS loan can prove useful for potential borrowers, it is not the best type of loan available. In fact, PLUS loans are generally considered the last resort when it comes to obtaining federal student aid.

Here are some pros and cons of Parent PLUS student loans.

What are the advantages of Parent PLUS loans?

Some things are good about Parent PLUS loans. The simplest good thing about this type of loan is the fact that it will cover all of a student’s needs to attend school, minus any loans you have already received from federal funding. This is true even if you are attending a more expensive university. As long as the school is part of the direct loan program, you will be able to obtain financing.

In addition, it is possible to obtain a Parent PLUS loan for a student even with less than perfect credit. Those with unfavorable brands on their credit reports can get co-signers or prove extenuating circumstances. As we’ll see later, however, this can be both a plus and a minus of Parent PLUS loans.

What are the disadvantages of Parent PLUS loans?

Since people looking for Parent PLUS loans usually borrow more than those who don’t (as they are supposed to cover expenses after all other federal lending options are exhausted), these loans do not match. the best conditions. . Of all federal student loans, Parent PLUS loans have the highest interest rates (currently 6.28%) and the highest origination fee (over 4.2%). High interest rates and fees make loans less affordable for borrowers. This is something you will need to consider before taking out a Parent PLUS loan.

Getting back to the fact that you don’t need to have good credit to get a Parent PLUS loan, even though it’s good in the short term, it can be harmful in the long run. Since Parent PLUS loans allow you to borrow as much as you need to meet college requirements, it’s easy to end up eating more than you can chew on. This is especially true when it comes to a parents ready, in which the borrower is not the person who actually uses the money. Losing sight of what is realistic to pay back to help your child can lead to lasting financial hardship.

Are there better alternatives to Parent PLUS loans?

Fortunately, there are better alternatives to Parent PLUS loans. While it may surprise some people, you might be better off finding additional loans from a private lender.

Those who have already reached the federal loan limit for Stafford loans should take a look at what Juno has to offer its members. Although they are not lenders, they are able to provide students with the best loan deals. This is because instead of lending directly, they accept offers from lenders who want access to Juno’s large membership base. By signing up, you will be able to take advantage of these low rate offers with no setup fees.

In the United States, individuals must cumulatively more in student loans than they do with credit cards or auto loans. Going into debt to pay for your education has become a standard part of schooling. Don’t let the costs take their toll on you and your family. Understanding the pros and cons of Parent PLUS loans can help you decide if getting one is right for you.

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