Personal Loans

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College tuition, books, dorm fees, all of it continues to skyrocket. It is difficult to cover everything with a Stafford loan. Now more money is needed and parents are looking for something to pick up where the Stafford loan leaves off. That is when they turn to parent loans for undergraduate students, better known as PLUS loans.

PLUS loans carry a higher rate of interest than other student loans. However, they are also more accommodating when it comes to who they lend to and how much they lend.

Some of these loans are subsided by private lending institutions and the interest rate runs a bit higher, as much at .6% higher. That may not seem like a lot, but when you factor that difference over the life of the loan you could pay as much as $200 more for this loan. These loans fall into the category of the Federal Family Education Loan program (FEEL).

You can run the numbers at bankrate.com/brm/mortgage-calculator.asp to understand precisely how much you are paying for your loan.

A child’s education is important and no parent wants to extremely limit his child’s choice of colleges because of high tuition. Of course the child must decide within reason of the family’s budget. However, the PLUS loan program gives the parents more leeway in spending because it covers 100% of the college expenses not covered by other loans.

This is only an option if parents have maintained decent credit because for PLUS loans there will be a background check on the parents credit. The student’s credit is of no significance.

There is the possibility of getting a guarantor to sign on the loan in the event that parents have less than perfect credit that prevents them from qualifying on their own for a loan. This used to happen in very rare cases. However, need for another person to guaranty payment on a loan is a crutch that more parents have to depend on now.

There are also instances in which students who are attending graduate school can apply themselves for a PLUS loan. Their credit is examined just as a parent’s would be and they are held to the same standard of requirements. They also receive the same interest rate offer as any parent with a similar credit rating.

Before considering consolidation as a way to get your debt paid off, research the debt consolidation loan consequences. It isn’t always the best solution to consolidate your debt. Find out why on the Inside Debt Consolidation website at http://www.insidedebtconsolidation.com