Federal Parent Student Loans

Federal parent student loans are financial assistance programs that allow the parents of an undergraduate student to help secure funds for tuition and other costs. Many lenders are available throughout local areas and online to offer these services to families. These funding programs are available regardless of income or assets. A federal parent student loan usually means a low variable interest rate with flexible repayment options. No collateral is required and interest rate reductions are possible if repayment is set up to auto debit through a checking account.

To apply for funding, the FAFSA (Free Application for Federal Student Aid) must be submitted as soon as possible. Parents or students can contact the school of choice and talk with a financial counselor who will be able to send forms needed or direct the family to the FAFSA website. It usually takes 4 to 6 weeks to receive a Student Aid Report, or SAR, which will map out eligibility and particulars. This will allow the family to know if they will be able to receive a federal parent student loan. After receiving the SAR the school will help the parent determine remaining costs needed for tuition and other costs towards the child's education. Additional costs may include, supplies, books, computer, software, and room and board.

The funding that is offered to parents is called a Federal Plus loan. This type of Federal parent student loan usually carries low interest, options to postpone payments, longer repayment terms, easier credit requirements, and variable rates. Rates are adjusted on Federal parent student loans yearly. Interest rates will usually cap at 9% for the life of the loan. If the rate goes up from that, the government pays the additional interest to the lender. There is usually a 3% government origination fee. A 1% guarantee fee may also apply on this type of loan. Other perks to Federal parent student loans include the option to consolidate immediately after disbursement to extend repayment terms and reduce the monthly payment. There are no penalties for prepayments.

For qualification, a parent must be biological, adoptive, or a stepparent of the individual attending college. Further eligibility includes being a U.S. citizen or eligible non-citizen and the person must be less than 24 years of age and unmarried with no dependents. A Federal parent student loan requires that national standards be met for credit worthiness. Interest may be tax deductible. Helping a child grow in knowledge and wisdom can become a reality through these financial assistance programs. "Whom we preach, warning every man, and teaching every man in all wisdom; that we may present every man perfect in Christ Jesus." (Colossians 1:28)


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