Few students make it through college without receiving some form of assistance from their parents and, in certain cases, there are parents that go beyond simple monthly allowances or meeting costs, like books, to help their students lower the overall financial burden that college tuition costs may have, but in cases where funding is simply not available for a student in an amount that will allow them to meet these necessary costs, options like the Parent PLUS Loan has been one method that parents have used to help their children pay for their education. However, there are certain aspects of this college loan option that needs to be explored before student financial aid is sought out by parents in terms of a college loan to help meet these costs.
Parents who are able to acquire one of these Parent PLUS Loans are usually either in a position where they may be able to repay this debt without much trouble, or these loans are acquired out of necessity when a student may have maxed out their student loan options. Typically, these parent loans are available with a fixed interest rate, which is the case for student loans as well, so the costs can be kept to a minimum and these options can be more affordable than a private loan, as an example. Yet, this will depend on a parent’s financial position because there are some private parent loans that can be more affordable for a particular borrower if they happen to have excellent credit and can get a lower fixed rate. However, this is one aspect of parent loans that needs to be explored as there are some private options that may require a borrower to settle for an adjustable rate on their loan, which could be more costly in the long run if they cannot pay off this debt quickly or see their interest rate rise.
However, an article on Bankrate.com also points out that parents need to be careful when contributing to their child’s college education and, “College contributions should never supersede contributions to retirement accounts or mortgage payments, two areas the federal government doesn’t consider when assessing a family’s financial need.” Understandably, there have been some parents who have sacrificed their own financial security to help students meet college costs, but this is usually poor investing as a student can find numerous methods of financial assistance to meet college costs, whereas adults who sacrifice contributing to a retirement account or use funds that may be helpful for them later in life are not as easily recouped after putting a student through college.
Yet, alternatives to student loans and parent loans are highly stressed by many financial aid counselors as the repayment requirements on federal loans can be more affordable and there are options for consolidations, forbearance, or even student loan forgiveness, but any type of debt related to college expenses will be costly and should be avoided if at all possible. For this reason, students need to make sure that they research scholarship and grant opportunities and exhaust all forms of free financial aid that will be available for their situation before even considering loans, and some have even been able to find further aid by contacting their university’s financial aid office or simply getting on a semester payment plan that will allow them to meet college tuition costs throughout the school year rather than all at once, which again could require the need for student loans.