A popular way for parents to pay for their children's educations is by borrowing through the Parent Loan for Undergraduate Students (PLUS) loan program. It is part of the Federal Family Education Loan Program (FFELP) and it allows you to borrow up to the difference between your child's educational costs and your child's financial aid award package. Parent PLUS loans carry a fixed rate and typically allow you to pay back the debt over ten years. There are also some flexible repayment options if you run into financial difficulties.
While student loans are fairly easy to qualify for, parent loans generally require good credit. There may be additional requirements such as:
- Two years of credit history,
- Two years full-time employment history with the same employer or in the same industry and,
- Two years at the same residence.
Educational loans are reported on the borrower's credit history as a type of installment loan. You help your credit history by paying the loan on time, but if you fall behind your credit will be damaged. Unlike credit card debt, most educational loan debt cannot be reduced or wiped out in bankruptcy.
About the Author
Gerri Detweiler is a longtime consumer educator and the author or co-author of five books, including Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights. Union members receive a 50% discount on the eBook.
The Parent Loan for Undergraduate Students (PLUS) loans are federal loans that parents of dependent undergraduate students can use to help pay for college.