How to Get the Best Federal Student Loans For Parents
It’s a struggle for many parents to take care of their children and complete their higher education. Fortunately, there are both federal student loans for parents and private parent student loans available to help you out.
To that end, just 33% of parents are able to complete their degree in 6 years after enrolling.
Difficult does not mean impossible however and every year thousands of parents are able to pick up their diploma come graduation day.
If you’re a parent considering starting or finishing your degree, congratulations. College can improve your market value in the job place significantly. It can also help set a tremendous example for your children.
But how will you afford to go to school?
Our team at Credit Squared have created this article to give you a rundown on what the best ones are.
1) Federal Direct PLUS Loan
The Federal Direct PLUS Loan is a popular federal student loan for parents option. We feel it’s the place any parent looking for help paying for school should start.
Having been around since 1980, this college loan for parents is built to be as beneficial to borrowers as possible. For example, your credit score will not affect your interest rate when taking out this loan. Also, the interest rate you get will be fixed for life so you don’t have to worry about your payments ever changing.
With this loan, you’ll typically start needing to pay it back right when you take it out. There are conditions however in which you can request payment deferrals until 6 months post graduation.
Loan payback terms are typically 10 years but this can be flexible as well depending on your income level.
Things that can disqualify you from this type of loan are as follows:
- Adverse credit
- Recent bankruptcy
- Recent foreclosure
- Tax Liens
- Wage garnishments
- Recent defaults on a loan product
Keep these things in mind if you wish to apply for this loan.
2) College Ave Parent Loan
A loan through College Ave can provide you with a flexible term loan with no origination fees. Still, there are some hoops to jump through with this one.
For starters, you’ll need to earn at least $70,000 per year and have a credit score of roughly 720 or higher. That’s no small feat for a parent looking to go back to school to improve their market value.
With this loan, you’ll have the option to choose between a fixed and variable APR. The variable APR will typically be lower out of the gate but, as its name suggests, may shift dramatically.
3) Parent Loans by SoFi
A student loan through SoFi has become a popular federal student loan for parents alternative given its impeccable variable interest rate. As of writing this, a variable loan through SoFi can go as low as 2.95%. That’s well below any fixed or even variable student loan rate we’ve seen from a reputable lender.
Furthermore, SoFi doesn’t consider credit to determine whether or not you’ll qualify. This is great for parents who are in the process of rehabilitating their scores.
Instead, SoFi utilizes factors such as your employment history and your monthly income relative to expenses. It’s worth noting that despite SoFi’s seemingly welcoming criteria, the average parent borrower of a SoFi loan has a credit score that exceeds 750 and has a household income of over $150,000 according to a spokesperson of the company.
4) Sallie Mae Parent Loan
Banking institution Sallie Mae has student loan options for parents for those that are “creditworthy individuals.”
While their acceptance criteria may be more relaxed than some of the other products mentioned on this list, their terms seem to be less favorable as advertised.
The lowest variable interest rate offered through Sallie Mae is 5.37%. That’s over 2% higher than the SoFi loan’s variable rate.
Also, this variable rate can swing as high as 11.74%. That’s the highest of any variable rate we’ve listed out here for you.
Factors that generally affect your interest rate are amount borrowed and a borrower’s credit history. So, if you have stellar credit, you can expect to fall within the low end of this interest rate range.
It’s also worth noting that Sallie Mae’s student loan product has fixed rate interest loans ranging from 5.74% – 12.87%. There is a low variance between the smallest rate you’ll get with variable versus fixed rate loans. Given that, if you qualify for a low fixed rate and aren’t borrowing a tremendous amount of money, going with a fixed rate will probably be a better value for you.
5) Your Current Banking Institution’s Products
Did you know that most banks offer federal student loans for parents? It’s true! Especially if you bank with larger institutions like Chase or Wells Fargo.
Taking out a student loan from a bank you’re already familiar with can streamline the loan process. It also makes keeping track of and making payments easy since you’re already familiar with the bank’s online portal and customer service.
So, if your bank offers student loan products, consider them! It’s always important to shop around for whatever the best college loans for parents options are and let their terms be your guide. Still, if your bank is offering competitive rates, getting a student loan with them can reduce the number of headaches you face.
Wrapping Up Federal Student Loans for Parents and Private Loan Options
If you’re a parent looking to go back to school, you’re making an excellent investment in your future as well as your children’s. If you’re worried about how you’re going to pay for it, explore the federal student loans for parents and private loan options above.
Remember, not all loan products are created equal. Do your research and fight for the most favorable terms that will lead you to pay the smallest amount possible in the long run.
A little diligence when it comes to shopping for loan products can set you up for big financial success in the future!
Like what you read here? Want to check out more? Our team at Credit Squared is constantly writing articles targeted at answering all of the financial questions people like you have! Dive in and read more about loan products, credit cards and beyond!
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