Parent plus loans are better. They have federal protections like income based repayment plans (based on parents income though, since they are the borrower).
This is really up to who wants to carry the debt. A student loan will require the student to repay it. A parent loan will require a parent to repay it. But as far as which one will be cheaper- it's the student loans (subsidized & unsubsidized loan...
What Are Some Reasons to Avoid PLUS Loans? First, PLUS loans have no automatic grace period. Then there's the fact they aren't eligible for most IDR plans. Then, borrowing too much is easy to do, and finally, they're nearly impossible to get out of, even in bankruptcy.
Parent PLUS loans can be eligible for Income-Contingent Repayment (ICR) and Public Service Loan Forgiveness (PSLF). However, they must be consolidated into a federal Direct Consolidation loan first. Your eligibility for these programs can depend on your income and the type of employer you work for.
How to Use the Double Consolidation Loophole: The key to using the double consolidation loophole is to consolidate each of your Parent PLUS Loans twice. In this scenario, a borrower can have as few as two Parent PLUS Loans.
Your parent's PLUS loan will be discharged if your parent dies or if you (the student on whose behalf your parent obtained the loan) die.
Parent PLUS loans are educational loans, and the borrower can get an income tax deduction. When borrowers review their tax deductions, they can deduct up to $2,500 per year in interest paid on the Parent PLUS loan.
Parent PLUS loans can be a good alternative to private student loans because they offer more flexible repayment options. But Parent PLUS loans can be costlier than other options, and consequences are harsh for default, including the potential for wage and Social Security garnishment.
Generally, you'll have from 10 to 25 years to repay your loan, depending on the repayment plan that you choose. Your required monthly payment amount will vary depending on how much you borrowed, the interest rates on your loans, and your repayment plan. Choose a repayment plan that best meets your needs.
Can the loan be transferred to the student? No, a Direct PLUS Loan made to a parent cannot be transferred to the child. You, the parent borrower, are legally responsible for repaying the loan.
How student loans affect a parent's credit score. Like any kind of loan, a student loan can affect your credit score as the primary account holder or even as the cosigner. Once the repayments kick in, the way you handle them can feed into your credit history and could thus count toward your credit score.
Summary: The Parent PLUS Loan is a federal loan that parents of dependent undergraduate students can use to help pay for their child's education. The Direct Parent PLUS Loan offers a fixed 9.08% interest rate for the 2024 - 2025 school year and flexible loan limits.
Federal student loans are made by the government, with terms and conditions that are set by law, and include many benefits (such as fixed interest rates and income-driven repayment plans) not typically offered with private loans.
Pay Off High-Interest Loans First
With this approach, you pay off your loans from the highest interest rate to the lowest. You make the minimum payments on each balance except the highest-rate loan. You also make an extra monthly payment based on how much you can put toward the debt.
You can get student loans without parents if you're classified as an independent student or, in some cases, a dependent student.
Drawbacks of the Parent PLUS Loan
Discharge: Federal parent PLUS loans are rarely discharged for financial difficulties resulting from unemployment, age-related or other illnesses and injuries, or bankruptcy. Nontransferable: Parents cannot transfer the PLUS loan to their student to repay after they finish school.
Parent PLUS loans can potentially be forgiven after 10 years under specific conditions, such as through the Public Service Loan Forgiveness (PSLF) program after consolidation into a direct consolidation loan. Parent borrowers must enroll in the Income-Contingent Repayment (ICR) plan to qualify for PSLF.
If you're a parent or graduate student seeking a Direct PLUS Loan, one of the requirements to qualify is that you must not have an adverse credit history. If your application is denied because of an adverse credit history, don't give up. You still have options.
A parent PLUS loan can help fill any gaps not covered by your child's financial aid package. The government offers parent PLUS loans with fixed interest rates, flexible repayment options and even opportunities for student loan forgiveness.
Parent PLUS loans are made directly to parents for their child's education. Under the current rules, parents cannot transfer these federal loans to a child, and they are solely responsible for paying back the loan.
There are no set borrowing limits for Direct PLUS Loans, but you may not borrow more than the cost of your child's education minus any other financial aid received, such as a Direct Subsidized Loan or Direct Unsubsidized Loan. The school will determine the actual amount you may borrow.
Medical debt and hospital bills don't simply go away after death. In most states, they take priority in the probate process, meaning they usually are paid first, by selling off assets if need be.
Parent PLUS Loans are eligible for total and permanent disability discharge if the parent borrower, not the student for whom you borrowed, is totally and permanently disabled. For more information on TPD eligibility: https://studentaid.gov/manage-loans/forgiveness-cancellation/disability-discharge.