Best Parent Student Loans of August 2021 | Find the Best Loan for You

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As a parent, it’s natural to want to do anything you can to help your child. So it’s no surprise that some 3.6 million parents had outstanding loans through the federal student loan program at the end of 2019, according to a study by Trellis Research. If you’re considering helping your child by taking out parent student loans, here’s what you should know.

The Best Parent Student Loans for College in 2021

College Ave

3.24% to 12.99% with autopay Fixed APR
Cost of attendance, minus aid Max. Loan Amount
Mid 600s Min. Credit Score

Earnest

3.34% to 12.78% with autopay* Fixed APR
No maximum Max. Loan Amount
650 Min. Credit Score

U-fi

3.59% to 12.37% Fixed APR
$500,000 Max. Loan Amount
680 Min. Credit Score

Sallie Mae

3.50% to 12.60% with autopay Fixed APR
Cost of attendance, minus aid Max. Loan Amount
Mid 600s Min. Credit Score

RISLA

As low as 2.99% Fixed APR
Not disclosed Max. Loan Amount
680 Min. Credit Score

SoFi

3.49% to 10.66% with autopay Fixed APR
Cost of attendance, minus aid Max. Loan Amount
Not disclosed Min. Credit Score

Citizens Bank

4.18% to 10.95% Fixed APR
$150,000 Max. Loan Amount
Not disclosed Min. Credit Score

Discover

4.24% to 11.99% Fixed APR
No maximum Max. Loan Amount
Not disclosed Min. Credit Score

Find the Best Student Loans for You

Best for instant approval

College Ave exclusively offers student loans. Founded in 2014 based in Wilmington, Delaware, College Ave offers undergraduate, graduate parent loans for students enrolled at schools affiliated with College Ave in all 50 states the District of Columbia. College Ave’s advantage is speed, with applications that take a few minutes to complete instant decisions.

Before You Apply

  • Loan types: Undergraduate, Graduate, Parent Loan, Refinance, MBA, Law School, Dental School, Medical School, International Student Loan.
  • Minimum FICO credit score: Not disclosed.
  • Co-signer required: Yes.
  • Better Business Bureau rating: A+.

Best Features

  • Rapid application approval process.

  • Career loan programs with a completion incentive available.

  • College Ave Student Loans have no origination fees.

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Best for fair credit

Earnest is an online lender offering private student loans to current college graduate students student loan refinancing to graduates. The company was founded in 2013. Borrowers can choose their loan terms to fund up to the full cost of their education.

Before You Apply

  • Loan types: Undergraduate, Graduate, Parent Loans, Refinance, MBA, Law School, Medical School.
  • Minimum FICO credit score: 650.
  • Co-signer required: No.
  • Better Business Bureau rating: A.

Best Features

  • There are no origination, application or late fees.

  • You can choose your monthly payment loan term length.

  • You can use a co-signer on undergraduate or graduate student loans, student loan refinancing is available.

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Best for customer service

Education Loan Finance, also known as ELFI, is a student loan refinancing program offered by SouthEast Bank. Options are available in all 50 states to refinance private federal student loans, including undergraduate, graduate, parent MBA loans, as well as loans for law, dental medical school.

Before You Apply

  • Loan types: Undergraduate, Graduate, Parent Loan, Refinance, Medical School, Dental School, MBA, Law School.
  • Minimum FICO credit score: Not disclosed.
  • Co-signer required: No.
  • Better Business Bureau rating: A-.

Best Features

  • There’s no maximum loan amount.

  • All types of student loans are eligible for refinancing.

  • Borrowers with up to a 50% debt-to-income ratio may be approved.

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Best for low minimum loan amount

U-fi offers private student loans to borrowers in 49 states. Undergraduate graduate are available. The lender specializes in offering flexible repayment options.

Before You Apply

  • Loan types: Undergraduate, Graduate, MBA, Law School, Health Professions Loans.
  • Minimum FICO credit score: 680.
  • Co-signer required: No.
  • Better Business Bureau rating: A+.

Best Features

  • Borrowers can get up to 15 years to pay off the loan.

  • The lender offers an interest rate discount for automatic payments.

  • While enrolled at least half time, borrowers can make full payments, pay only interest or defer payments.

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Best for product availability

Sallie Mae is a publicly traded consumer bank that offers private student loans to pay for undergraduate, graduate specialty degrees. The company started in 1973 as a government entity that serviced federal student loans. It went private in 2004 has a range of student loan products. Beyond student loans, Sallie Mae Bank offers savings products credit cards with incentives for using cash back rewards to pay back student loans.

Before You Apply

  • Loan types: Undergraduate, Parent Loan, Graduate, MBA, Medical School, Dental School, Law School.
  • Minimum FICO credit score: Mid 600s.
  • Co-signer required: No.
  • Better Business Bureau rating: A+.

Best Features

  • Student loans completely cover school-certified expenses – tuition, fees, books, housing, meals, travel a laptop.

  • Customer service is 100% U.S.-based.

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Best for fixed APR

The Rhode IslStudent Loan Authority is a nonprofit quasi-state authority that provides college financing to students parents. The lender specializes in providing loans to Rhode Islresidents students, though not all loans have residency requirements.

Before You Apply

  • Loan types: Undergraduate, Graduate, Refinance, Parent Loan.
  • Minimum FICO credit score: 680.
  • Co-signer required: No.

Best Features

  • Students can be enrolled less than half time still qualify.

  • Refinancing loans do not have residency requirements.

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Best for multiple repayment options no fees

SoFi is an online lender founded by Stanford business school students in 2011. Originally focused on student loan refinancing, the company added private student loans in 2019. Its student loans for undergraduates, graduates parents start at $5,000 charge no fees.

Before You Apply

  • Loan types: Undergraduate, Graduate, Parent Loan, MBA, Medical School, Law School, Refinance.
  • Minimum FICO credit score: Not disclosed.
  • Co-signer required: No.
  • Better Business Bureau rating: A+.

Best Features

  • Zero fees: You won’t have to pay origination fees, application fees, late fees or insufficient funds fees.

  • Flexible repayment options: SoFi offers co-signer release options, plus borrowers hit by financial hardship can access programs benefits.

  • Prequalify: Whether seeking undergraduate, graduate or parent loans, you your co-signer can check rates terms before submitting a full loan application without hurting your credit scores.

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Best for streamlined approval process

Citizens Bank was founded in the 1800s in Rhode Island. Today, it’s one of the largest commercial banks in the U.S., with branches in 12 states in New England, the mid-Atlantic the Midwest. U.S. citizens permanent residents can apply for Citizens Bank student loans, as can non-citizens with creditworthy citizen or permanent resident co-signers.

Before You Apply

  • Loan types: Undergraduate, Graduate, Refinance, Parent Loan, MBA, Medical School, Dental School, Law School, International Student Loan.
  • Minimum FICO credit score: Not disclosed.
  • Co-signer required: No.
  • Better Business Bureau rating: A+.

Best Features

  • Citizens Bank offers multiyear approval loans, meaning that once you get started, you will continue to secure funding for subsequent years in school without needing to go through a credit check every year.

  • Borrowers who sign up for automatic payments can reduce their interest rates by 0.25 percentage points.

  • If you have a qualifying Citizens Bank account, you can earn an additional 0.25 percentage point discount.

  • International students can apply if they have a co-signer who is a U.S. citizen or permanent resident with good credit.

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Best for no fees

Discover Bank has been operating for more than 100 years, it currently offers private student loans to students attending more than 2,400 colleges universities. Loans as small as $1,000 up to 100% of education costs with fixed or variable rates are available.

Before You Apply

  • Loan types: Undergraduate, Graduate, Parent Loans, Refinance, MBA, Law School, Health Professions, International Student Loan.
  • Minimum FICO credit score: Not disclosed.
  • Co-signer required: No.
  • Better Business Bureau rating: A+.

Best Features

  • Loans as small as $1,000 are available. This can help families bridge the gap between financial aid out-of-pocket college expenses.

  • Co-signers are accepted. Parents or grandparents may choose to co-sign a loan for their student to help them qualify for a lower interest rate.

  • Discover has no origination, application or late fees.

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What Is a Parent Student Loan?

A parent student loan is a type of federal or private student loan that’s designed specifically for parents who are helping a child pay for school.

These loans tend to have higher interest rates fees than undergraduate student loans. However, parent loans can also come with higher limits, which could come in handy if your child is attending an expensive school needs more financial aid than the Department of Education offers.

When it comes to how parent student loan funds can be used, they’re generally no different from what a student can do with a traditional student loan.

What Are the Different Types of Parent Student Loans?

There are two types of student loans that parents can choose from: Parent PLUS Loans private parent student loans.

Parent PLUS Loans

The Direct PLUS Loan program is a federal student loan program includes Parent PLUS Loans. Only biological or adoptive parents are eligible to apply for a Parent PLUS Loan, so it’s not an option if you’re a grandparent or other guardian. Additionally, Parent PLUS Loans are only usable for undergraduate educational costs, so they aren’t an option to help a child get through graduate school.

When you apply for a Parent PLUS Loan, which you’ll do by filling out the Free Application for Federal Student Aid, or FAFSA, the Department of Education will run a credit check to ensure you don’t have any adverse credit items on your reports. Examples include significant delinquencies collection accounts or a recent foreclosure, bankruptcy or repossession.

Parent PLUS Loans come with the highest interest rates of all federal student loans, but they’re standardized, so everyone who qualifies gets the same rate. Borrowers are limited to just one of the federal program’s four available income-driven repayment plans – the Income-Contingent Repayment Plan.

Private Parent Student Loans

These loans are offered by private lenders outside of the federal student loan program. As a result, they don’t qualify for federal benefits.

When you submit an application for a private parent student loan, the lender will run a credit check to determine your creditworthiness. Your approval, as well as the terms of the loan, are dependent on your credit history, income other factors.

Interest rates can vary from lender to lender, as well as from borrower to borrower. One benefit of private parent student loans is companies typically don’t charge an upfront loan fee as the federal government does. Unlike the federal government, private lenders don’t offer income-driven repayment plans.

What to Consider When Choosing a Parent Loan for College

Before you start shopping around for parent loans, it’s important to consider whether borrowing money is the right decision.

“Parents need to think about how the additional parent debt impacts their own financial goals,” says Matthew Carpenter, CEO of College Funding Services. “Will this harm plans for retirement, their daily lifestyle or household budget? What is the likelihood of a return on the investment?”

Also, because parent student loans tend to be more expensive than undergraduate student loans, it may make more sense to have your child apply for student loans, says Travis Hornsby, founder of Student Loan Planner. Then once your student receives the financial aid award letter, you may choose to borrow via parent loans to cover the gap.

If you’re certain you want to apply for parent student loans, follow these steps to help you choose the right option for you your child:

  • Check your credit score. A high credit score – a high income – are key to qualifying for the best interest rates private student loan companies have to offer. If you can manage to score a lower interest rate than what the federal government offers, it could save you big time. But if your credit is average, Parent PLUS Loans may give you a better offer.

  • Shop around. If you’re considering private loans, it’s crucial that you take the time to compare rates from several lenders. Remember, different lenders can have different interest rate ranges, they may also differ in how they underwrite applications. The good news is that you can get prequalified with multiple lenders to get rate quotes there’s no hard credit check or commitment involved.

  • Think ahead. Even if you can score a lower interest rate on a private loan, it might not be the right fit. “Where private loans may have lower rates overall, they are the least flexible in repayment terms,” says Carpenter. “Federal loans may have higher interest rates – not always – but they offer the most flexibility in repayment terms, which helps to protect the borrower in case of job loss or another unplanned event.”

How to Apply for a Parent Student Loan

If you’re applying for a Parent PLUS Loan, here are the steps you’ll need to take to receive the financing you need:

  • Fill out the FAFSA with your child, with the child’s information as the student yours as the parent.
  • Fill out a separate application for Parent PLUS Loans after your child has submitted the FAFSA.
  • Make sure you don’t have a freeze in place on any of your credit reports.
  • Sign the promissory note.
  • If there are excess funds beyond what’s paid to the school for tuition fees, designate whether the school should send the remaining balance to you or your child.

“Be aware that Parent PLUS Loans don’t have a grace period,” says Hornsby. “Repayment starts immediately when you take out the loan. You can always request deferment, but there isn’t a guarantee you will get the loans deferred.”

With private student loans, the process doesn’t require filling out the FAFSA, but it’s still a good idea for students to fill out the form in case they qualify for any other types of federal financial aid.

To apply for a private parent student loan, you’ll need to:

  • Shop around compare rate quotes from multiple lenders.
  • Choose the best lender for you submit an application via its website.
  • Provide any documentation required by the lender, such as pay stubs or a government-issued photo ID.
  • Determine how long the repayment term will be.
  • Once the lender returns a final offer, decide whether to accept.
  • If you accept, complete the process by agreeing to the terms conditions of the contract.

Once you’ve completed the process, the private lender may choose to send the loan funds directly to you or disburse them to your child’s school. You’ll typically start making payments immediately.

Who Is Responsible for the Repayment of a Parent Student Loan?

As the borrower on a parent student loan, you are the only person responsible for repaying it. Even if children agree to take over payments after graduation, they’re not legally obligated to make good on that promise.

By refinancing, it’s possible to transfer parent student loan debt to the child after graduation, says Hornsby. “This is an option that a lot of parents their children do,” he adds. “You can transfer the loan by having your child refinance it into their name as long as they have good credit history are able to make the student loan payments.”

Because of the responsibility associated with parent student loans, it’s crucial that you consider how taking one out can impact your financial well-being, both now in the future.

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