Are you or someone you know looking into parent student loans? If so, there are several things you need to know and at least a few points to keep in mind. This is one of those instances where it’s worth it to shop around; look at multiple lenders, request quotes and compare interest rates. It might seem like an easy option, but you never know how much you’ll end up paying and what kind of terms and conditions will be attached to this type of student loan.
The first thing you should know is that parent student loans have two main types: Federal loans and sofas. Federal loans are made directly to students via the United States Department of Education. They come in two varieties: Direct and Subsidized. There are also private and for-profit companies that will make these loans to students, so it pays to shop around as well.
As mentioned above, both types of parent student loans come with different loan limits and interest rates. Federal loans offer fixed rates so you won’t have to worry about inflation adjusting your loan limits. In addition, federal student loans have low minimum repayment amounts and no penalties for early payment. But remember that federal student loans are backed by the federal government, which means that there is a decent chance that the loan will be delayed or even stopped by some form of government intervention. This is why it pays to shop around when it comes to interest rates on parent student loans.
Parents with good credit and/or steady employment can use parent student loans to pay for tuition, books and other college expenses. There are two types of parent student loans: Plus loans and Standard repayment plan (SRP). Plus loans are available from many traditional private lenders. They are typically more expensive than the standard repayment plan, which may be why they are generally not offered by traditional private lenders.
Most federal parent student loans are made through private lenders. Private lender interest rates are often higher than what you would get in a bank, but they offer better loan terms. The terms of the private loans are usually five years minimum, which means you will have to pay your student loan back no less than five years, although the longer the loan is, the lower the interest rate you will pay. When comparing private lender interest rates, make sure you compare all interest rates, not just the base rate.
If you have both a federal parent loan and a private parent loan, there are ways to consolidate both of them. This will help pay off your debt faster, and you’ll save money in interest over the life of the loan. To do this, you must consolidate both your federal and private student loans into one monthly payment. Talk to an experienced consolidator to help you combine your loans and get the best interest rate.
Most private lenders don’t allow students to consolidate with parents. If you want to consolidate with your parents, you need full responsibility of your loan payments. In most cases, the parent will take responsibility for paying off the loan and the students will need to be responsible for repaying the loan. Talk to an experienced student loan consolidation company if you want to consolidate with your parents.
Federal student loans don’t require you to repay part-time unless you are enrolled full-time at a university or college. Part-time students must work for a minimum of 5 years in order to be eligible for a federal student loan, so it is likely that you won’t be able to consolidate with your parents part-time. Your parents must also be registered at the same college or university in order to consolidate with you. For most students, once they graduate they become responsible for their own student loans, so it is likely that they will still want to talk to an experienced student loan consolidation company.