In this economy, the mere thought of trying to figure out how to get kids through college is especially daunting. For moms who have to confront this concern right now, Suze Orman, one of the nation's top financial advisors, suggests something called a Parent Plus Loan.
This is a loan that lets parents take the weight, so to speak, and put kids through school on a loan in their parent's name instead of their own. Recent changes brought on by the economy are
actually favorable for borrowers; now, you do not have to pay the loan
back until after the student has graduated. Also, the interest rate is
relatively low--8.5%.
With a Plus Loan parents can borrow the total cost of undergraduate education including tuition, room and board, and any other eligible school expenses.
No, it's not a free ride, but it can surely take a lot of stress out of trying to figure out where college money will come from. If you'd like to compare notes with other mothers who may need or have loans, join the public the group Moms of College Kids.
Do your college kids get financial aid or loans?
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Comments 13
8.5% is extremely high to me...... and it doesn't mention what the parents 'Credit Score' would have to be.... because as the news has said........ All loans are going to be really 'cracked' down on........... Suzy pisses me off all the time, its like she doesn't live in the 'real world'........ I don't think its a good idea for a parent to take on a kids debt...... I mean most parents will be thinking the kid will make the payments after they graduate and if its in the parents name... its will be legally the parents debt legally...... stupid advice in my opinion. --
Right? More loans to help kids get through college... and at 8.5%. I don't think so. How about telling your kid (and helping them) get good grades and full ride scholarships. If they can't do that and they still want to go to college, either get a job, or get their own loans. I don't think there's a problem with a parent saving up some money to help pay for college, but there's something wrong with getting into debt to pay for your childs college. Especially at 8.5% interest rate.
No, DH and I didn't take on loans for our college-bound kids. They had to put the loans in their names. And if they choose to flunk out (yes, they did), then we're not angrily paying off their loans. Now if they graduate, we will help them pay them off.
I have one for my dd and I pay it back while she is still in school. We didn't make a habit of it, but one year she had trouble making ends meet.
My daughter just qualified for a Pell Grant and she had a full scholarship for her tuition for 4 years. She got her paperwork allowing her to be a student worker on Monday and was hired yesterday.
We can afford the leftover amounts (if the textbooks don't kill us) without a loan.
Our sons did a similar route.
There are other types of federal financial aid that should be taken out first. The Pell, FSEOG, and MAP are all grants that don't have to be paid back. Also, Federal Stafford loans are non-credit based loans fixed at 6.8%. If a student needs additional aid, then Parent Plus would be the last option. DON"T go for private educational loans though.
My son is only six months but we've already started planning for college. We're doing the same thing my parents did with me--starting a savings account for him that all his money goes into for now--Christmas, Baptism, etc, and 20 bucks here and there when we can. When he starts getting an allowance and later working, half of everything he earns will get put away for college, too. We can either pay for his college or our own retirement, and it's way easier for him to borrow for college and work his way through.
Oh, I should mention, unfortunately, it's no longer possible to get student loans at interest rates of 2% or less. Stafford loans used to be a variable interest rate that was capped at 8.25%. In the mid-2000's the interest rate was around 2.8%, and students were able to consolidate their loans and lock in that rate. After reauthorization, it was decided that Stafford loans should be FIXED at 6.8%, and Parent Plus loan and Graduate Plus loans are fixed at 8.5%.
It's sad. Tuition seems to go up at least 3% a year and student loans are becoming ridiculously expensive.