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Once you and your student have discussed the cost of the colleges they’re considering attending and who will be paying for their education, it’s time to get into the details of how to finance it.
If your student needs more money for school beyond federal loans in their name, you may choose to help them out. That’s where direct PLUS loans-more commonly known as Parent PLUS loans-and private student loans come in. PLUS loans are issued by the federal government to the parent of a qualified student enrolled in school. However, this is not the only option for parents looking to borrow to pay for their child’s education. There are also private education loans that are issued by private lending institutions, like a bank or Earnest.
Understanding the differences between Parent PLUS loans and cosigned private loans will help you decide which is the better option for funding your student’s college education.
How a Federal Parent PLUS Loan Works
Before you can apply for a PLUS loan, you’ll need to file the FAFSA (Free Application for Federal Student Aid). The FAFSA will not only let the US Department of Education and your child’s school determine how much financial aid they can receive, but also which federal loan types your family is qualified for. Continue reading “Should You Take Out a Parent PLUS Loan or Cosign a Private Loan?”