Parent Plus Loans are one type of way families chose to pay college tuition. The student loan process is complicated for most families.  When it comes to parent student loans, there is increased confusion.  Most parents do not realize that the student is very limited in the amount of loans available to them.  Most parents will need to either take a Parent PLUS loan or co-sign on a private student loan.  Both of these loans are legally the parents.

The Parent PLUS and private student loans do not offer the same repayment options as the federal student loans.  The Parent PLUS loans are federal loans.  There are a few advantages with federal loans but they cannot be consolidated with the student loans.  These two loan types are the only loans that a college financial aid office can discuss with you. This is one of the limitations the financial aid offices have, in that they cannot discuss all of your financing or payment options.

Some parents have other alternatives to consider depending on your overall financial strength and personal financial goals. Understanding the risk of these decisions needs to evaluated since they may cost significantly less than the PLUS and Private loans.  The two most common loans would be a home equity loan or a loan from an active company retirement account.  The decision to use one of these options needs to be approached with more care.  These loans can affect other personal financial goals in your life and need additional analysis.

As stated in various pages within this website proper planning is required to pay for college.  Reviewing the financing options with your personal goals needs to be done to make the best decisions.  You need to analyze both the short and long term impact of this decision.   Many of the college funding choices are inter-related which can make the decision more complex.

This video on parent student loans addresses the following topics:

  • Legal responsibility of the loans
  • Parent Loan Options
  • Loan Restriction

Understanding the cost and risk of each parent student loan option needs to be considered to properly pay college tuition.  Evaluating your parent student loans and how it will impact other financial goals is available, please visit our College Affordability Services.

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