This post is created in partnership with College Ave Student Loans, which has an A rating from the Better Business Bureau.
Is paying for your kid’s education a priority? Do you have enough saved to pay for it easily? As a general rule of thumb when it comes to paying for college tuition, it is best to use scholarships, grants, and federal Direct Subsidized or Unsubsidized Loans that are in the student’s name. But, what if parents want to fund a portion of the education in his or her name and not the student’s name?
If you’re considering taking on a debt for your student’s education, consider first these points:
- What is your credit score? Similar to applying for a mortgage, a better credit score equates to better rates. If you are thinking about taking on debt, prepping your credit is an essential first step. And, you can get free credit health check offered by College Ave Student Loans and Experian: https://www.collegeavestudentloans.com/crediteducator.
- If you sign loans for your student’s education solely in your name, you are solely responsible for that debt. How will this move affect your own financial goals? Are you ransoming your retirement for your kid’s college degree?
- Consider sharing college debt responsibility by co-signing a loan with your student.
- Educate yourself about the real benefits and limits of a federal student loan. Note that most federal repayment and forgiveness benefits do not apply to Parent PLUS loans. For example, public service forgiveness only applies if the parent first consolidates their PLUS loans, qualifies for, and enrolls in the income-contingent repayment plan, and then makes 120 qualifying monthly payments under that plan.
Until recently, there were few finance options specifically tailored for parents of college students aside from the Direct Parent PLUS loan program
That is changing.
College Ave Student Loans this month announced the new College Ave Student Loans Parent Loan, with no origination fee and a lower fixed interest rate than the federal Direct Parent PLUS loan. This can be a great option for parents committed to financing a portion of their student’s education.
College Ave’s Parent Loan offers a fixed rate of: 6.35% APR, and variable rates: of 4.03%-6.03% APR with autopay discounts (remember: interest rates are at record lows).
For parents taking on $14,750 in debt — the average PLUS loan in the College Board’s most recent report — on a standard 10-year repayment plan, the parent would save about $1,000 over taking a similar, federal loan. That savings is based on a federal Parent PLUS rate of 6.84% and 4.272% loan fee, vs. a College Ave Student Loans Parent Loan with a 6.75% interest rate and no loan fee. Even more savings can be had if parents select one of College Ave Student Loans shorter repayment terms.
The College Ave Parent Loan offers other perks, like the option to deposit up to $2,500 directly into parents’ bank accounts (for those of you insisting on control of spending on books, housing, and — face it — partying). Kidding aside, the money must go to approved educational expenses. These borrowers also have the choice to start paying in full right away, limit monthly payments while the student is in school, and customize repayment terms from between 5 to 12 years.
Loans start at $2,000 and can cover up to 100% of the school-certified cost of attendance. Parents will be able to apply for this new loan as of April 20. More info about College Ave Parent Loans at this link.
Want to learn more about how your credit history affects your ability to finance your student’s degree or how taking on education debt might affect you? College Ave teamed up with Experian to offer a free, 35-minute, one-on-one education session with an Experian Credit Educator agent. During the call, parents will receive a copy of their Experian credit report and score, a customized walk-through of the report, as well as expert advice for how to improve and manage their credit going forward. Sign up for your free counseling session here: www.collegeavestudentloans.com/crediteducator.
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