Applying for a parent-student loan? Here’s what you need to know

Student loan from a bank or a lender is usually the best way to plan and start your career. Student loans are taken by aspiring college students for their bright future. It eases them from their financial trouble and helps them focus on their academics more. There is another type of loan that is different from a student loan, and it’s called a PLUS loan.

What is the eligibility criteria to apply for a parent-student loan?

These loans are financed by the U.S. Department of Education. Here are certain requirements to be eligible for the loan.

• FAFSA application – You need to fill the Free Application for Federal Student Aid (FAFSA) and depending on the information that you provide, your appeal will be evaluated.
• Decent to good credit history – Just like any other loan, even parent-student loans are given after your credit history has been checked. The credit score plays an important role here and only upon checking that the loan is given (or not).
• Parent-child relationship – The loan can be taken for a biological child, adoptive child or even step-child but the relationship should be that of a parent with the child. The child must also be dependent on the parent. If you are the parent, then the child must be dependent on you for more than half of their expenses.
• Need for funds – The maximum loan that can be given is the difference between the financial aid that the parent has and the cost of college/school. The parent is eligible only if the child’s college fee cannot be paid from their own student loan or any other financial aids.

Things to know before taking a parent-student loan

• Know that it is debt – Parent-student loans are debts for you to pay. Your future earnings will become collateral to this type of loan. It is not the same when a student takes a student loan because that is backed by the potential future earnings of the student.
• Consider the number of years you have until you retire – When parents take a parent-student loan, they have to evaluate their earnings and savings. By the time a child reaches the college age, parents near their retirement and taking a loan when you are nearing your retirement can be a risk
• Understand all types of parent-student loans – There are federal and private loans. There are pros and cons for both and only upon learning about each type should a parent go ahead and take a loan.

How to apply for parent-student loan?

• Fill the FAFSA application
• If you are going for federal loan, go to studentloans.gov and complete ‘Request a PLUS loan’ option
• Only one of the parents can apply for a loan, and that one has to complete the Master Promissory Note with the Department of Education
• You can also apply directly from the website mentioned above
• You will find all the guidelines in the website, and the form has to be filled in one session only. It takes around 20 minutes to fill the form.

What are the top 5 parent-student loan providers?

The top 5 private parent-student loans’ providers are:

• Citizens Bank
• College Ave
• LendKey
• Connext
• Sallie Mae

Before choosing a private loan provider, it is important to find out all the pros and cons of private and federal loans.