Parent Plus Loans

For many students the biggest barrier to attending college is the cost of tuition. Even parents with moderate incomes can find it difficult to save enough money for the ever rising costs of a college education. Luckily there are some great Federal loans out there, some of which are even designed specifically for parents.

Direct Parent PLUS loans are a type of loan that parents can take out to pay for their child's college education. PLUS loans are not need based, and are determined solely by your credit rating. This means that you don't have to prove need in order to apply for the loan, and this is especially helpful for parents whose incomes might otherwise bar them from certain types of loans.

PLUS loans, like other Direct Student loans have extremely competitive interest rates. This gives parents a great alternative to other higher interest types of loans. The interest rate is adjusted each year by the Department of Education, and it is set to never exceed nine percent. Right now the interest rate is extremely low at 4.17 percent for the period ending in June of 2005.

There's No Penalty for Prepayment

Another of the great benefits of a Direct Parent PLUS loan is that there's no penalty for prepaying the loan. If your financial situation improves, you can simply make additional payments. This will lower the overall amount of interest you pay on the principle and can save you a significant amount of money in the long run.