As their children get ready to head to college, parents quickly realize the truth: a college education has never been more expensive.
Some students may some costs covered by college savings, scholarships, and grants. However, many need to borrow student loans in order to cover the cost.
There are hard limits to how much a student can get in the form of federal loans each academic year. To pay the rest, more and more parents are taking out parent loans such as the federal Parent PLUS loan.
Pros of Borrowing Parent Loans
- The amount you can borrow is not limited like traditional student loans. You can borrow what your child needs up to the cost of attendance for that academic year.
- Your interest rate remains fixed for the lifetime of the PLUS loan. This helps you plan your repayment and not worry about any curveballs regarding what you owe
- It’s possible to request a PLUS loan deferment while the student is in school, which gives you more options when it comes to paying back the loan.
See also: Complete Guide to Parent Loans
Cons of Borrowing Parent Loans
- Because PLUS loans and other parent loans are based on credit, you may not be able to borrow as much as you need.
- Because you can borrow so much money, it’s possible to borrow too much and end up in risk going into default.
- Unless you request deferment and get accepted, you must start paying parent loans back right away.