If you are going to pay for your child’s college through a parent student loan, you should compare your options before choosing a lender. It is wise to consider both federal government and private lenders that offer parent student loans.
Some of them include:
Federal Direct Plus Loans
The federal government has been offering parent student loans since 1980. The interest rate and the origination fee offered by federal direct plus loans for the year 2016-17 was recorded to be 6.31% and 4.28% respectively. They offer a 10-year term loan.
To be eligible for a federal direct PLUS loan, you need a bankruptcy and unpaid debt free credit history. An important thing to note here is that you will not be offered a lucrative interest rate if you have a good credit score. The interest rates of federal direct PLUS loans will remain the same throughout the financial year and would be set based on financial markets. A payment of the loan kicks in as soon as it is disbursed, you can request to defer payment until six months after your child leaves the school.
College Ave parent loans
Fairly new into the student loan space, it was started in December 2014. This parent student loan does not incur any origination fee and They charge a variable Annual Pay Rate between 4.03 to 6.03% and a fixed APR of 6.54%. The loan terms vary from 5 to 12 years.
To get a parent student loan from College AVE the applicant must have an annual salary of at least $70000 and a credit score of in mid-700’s. All fixed-rate parent student loan has the same APR. College AVE gives you the option to make a full monthly payment right away, or just pay the interest while the student is in college, or pay interest and whatever amount you can afford. Visit the official website to know more about the parent student loan offered by college AVE.
SoFi parent loans
SoFi offers some of the lowest interest rates available for parent student loan since their formation in the year 2011. However, they do not offer other flexible options such as entering forbearance if a parent is struggling to make payments. Like College AVE, it does not incur any origination fee. SoFi parent loans offer 2.95% to 6.13% variable APR and a fixed APR of 4.25 or 7.75%. They offer a 5 or a 10-year term to loan repayment.
You avail a parent student loan, you first need to fill out the Free Application for Federal Student Aid form or FAFSA which will decode your eligibility.