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The primary difference between a parent loan and a student loan lies in who is responsible for borrowing and repaying the funds, as well as the purpose of each loan type. Here's a detailed comparison:
- Borrower Responsibility
• Parent Loan: Taken out by the parent (or legal guardian) to help fund their child's education. The parent is legally responsible for repaying the loan.
• Student Loan: Taken out by the student themselves to pay for their education. The student is the borrower and responsible for repayment, though parents can sometimes co-sign.
- Credit Requirements
• Parent Loan: Typically requires a credit check. Eligibility and interest rates are based on the parent's credit history and income.
• Student Loan: Federal student loans often don’t require a credit check. Private student loans may require a creditworthy co-signer (often a parent) if the student has limited credit history.
- Purpose
• Parent Loan: Specifically designed to assist parents in covering educational expenses for their children, such as tuition, books, or living costs.
• Student Loan: Intended for students to fund their education-related costs. Federal student loans offer more borrower protections for students.
- Repayment Responsibility
• Parent Loan: Repayment begins immediately or shortly after disbursement, depending on the terms. Parents are solely responsible.
• Student Loan: Many federal student loans offer a grace period where repayment doesn’t start until after graduation or leaving school.
- Loan Types
• Parent Loan:
o Example: Federal Parent PLUS Loan in the U.S.
• Student Loan:
o Federal student loans like Direct Subsidized and Unsubsidized Loans.
o Private student loans from banks or financial institutions.
- Interest Rates and Terms
• Parent Loan: Often higher interest rates than student loans and fewer repayment flexibility options.
• Student Loan: Generally has lower interest rates and may offer income-driven repayment plans, deferment, or forbearance options.
- Loan Forgiveness
• Parent Loan: Limited eligibility for forgiveness, usually tied to specific circumstances.
• Student Loan: More options for loan forgiveness, especially for federal student loans under programs like Public Service Loan Forgiveness
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What is better a student loan or a parent plus loan?
Only a parent can apply for a parent loan. the payment plan for a student loan can be deferred until after graduation. It all depends on who is paying the loan off, the student or the parent
Is there a way to sign over a parent loan to the student so that the parent and student loans can be consolidated?
No.
Can a parent get out of a student loan if they can no longer work?
In some instances, a parent can get out of a student loan if they are unable to work. You can visit the Federal Student Aid website for information about discharge of debt.
Does a parent's credit score affect student loan?
If the student loan is taken out in the name of the student then no. The student's credit score is separate from anyone else's. If the student loan is taken out in the name of the parent or with them as cosigner then yes - their credit scores would come into play.
Can parent claim child and their student loan?
yes
Can a student get a loan if parents don't qualify for a parent plus loan?
My daughter attends a California State University,I didn't qualify for a parent plus loan. She was given a higher student loan limit for each semester. She initially was awarded 2950 per semester and after my decline she was then awarded a blend between sub. and unsub. loans of 4750 per semester. She was looked at more as a independent student vs a dependent student.
Can a parent get a student loan for a child if the parent files bankruptcy?
Probably not. What the loan is for isn't the issue. His record of repaying loans is.
Can a parent loan be signed over to a student?
In the US, unfortunately the answer is no. A parent PLUS loan must stay with the parent. If you cosigned on a loan for your child and the loan is federally guaranteed, then you can get your name off of the loan by having your child consolidate the loans. If you need help with the consolidation of the student loans, click on the link at the bottom of this text box.
How to Get a Parent PLUS Loan?
What is a Parent PLUS Loan?A Direct Parent PLUS Loan is a loan that is available for eligible parents of dependent students to pay for education expenses. A Parent PLUS Loan is available to cover the remaining amount of a student's cost of attendance after any other financial aid that the student is awarded. These loans are beneficial because of their relatively low and fixed interest rates of 7.9 percent. However, these loans do charge interest from the date that the first payment is disbursed until the loan is paid off.Who is Eligible for a Parent PLUS Loan?To be eligible to receive a Parent PLUS Loan, an individual must be either the student's biological parent or the adoptive parent. Some special cases allow for a student's stepparent to be eligible to receive a Parent PLUS Loan. The parent must meet certain credit history criteria, but a parent with a bad credit history is still eligible to receive the Parent PLUS Loan if a friend or family member co-signs for the loan. The student must be the Parent PLUS Loan receiver's dependent and enrolled in undergraduate school least half-time. Additionally, both the student and the parent need to be U.S. citizens or eligible permanent residents to qualify for the loan.How do you Apply for a Parent PLUS Loan?To apply for a Parent PLUS Loan, the parent needs to fill out a Direct PLUS Loan application. The parent also has to complete a Master Promissory Note, which is a legally-binding contract that requires the signer to repay the loan, interest and fees in full. A parent must submit a new loan request each year that the student requires funding for school, but the Master Promissory Note is typically sufficient for subsequent loans. The application and Master Promissory Note can be completed online at www.studentloans.gov. Once the department approves the loan, the payments are disbursed to the student's school. After the school has deducted the costs of tuition, room and board and any other charges, the school issues a check or direct deposit to the parent. The remaining funds must be used for purposes related to the student's schooling.
If a parent dies with unpaid student loans does the child inherit the debt?
No! Probate Court or the student loan provider may look to some of the asets that your parent may have left behind to satisfy the student loan. But you cannot be made personally liable for your parent's studnet loans unless you co-signed for them.
Can child support garnish your student loan in Pennsylvania?
No. Child support is based upon the non custodial parent's income. A student loan is considered a debt.
What is a fed parent loan for student?
It is called a PLUS loan in the U.S.The financial aid office at the student's school can tell you what lenders offer PLUS loans
