There are different financing options for college students that have to be considered. The parent PLUS loans offer additional financial aid for the payment of tuition fees and living expenses. The abbreviation stands for parent loan for undergraduate students. The name says it all – the parent borrows the money so that they can finance their child’s college education. It is possible for the student to be a cosigner. But the entire responsibility falls on the parent. They have to repay even if their child fails to do so.

This loan scheme is devised by the federal government, but the parents have the option to choose how to get the financing either directly or from a private lending institution. The interest rates are fixed in both cases. The one for a direct loan is 7.9%. The interest rate for a private one is 8.5%. The fees are also fixed – 4%. They are deducted from each payment check. It is possible for parents to get small discounts from the different private banks.

The repayment of the parent PLUS loans begins exactly 60 days after the total sum is disbursed. The parent will have to make repayments during their child’s school years. However, it is possible for the repayment to be deferred. In some cases it can be arranged for this to start after the student’s graduation. The repayment options are generally more flexible at present. Loan consolidation is also an option. But parents have to keep in mind that this type of credit cannot be bundled with federal ones that are given to the student as the signer is different.

In order to be eligible for parent PLUS loans the patent must not have an adverse credit history. The past five years are taken into consideration. If such a loan cannot be granted other financing options should be considered.