Why Parent Plus Loan Consolidation Is Great

Many parents elect to take on the obligation of paying for the secondary education of their children. While this is certainly beneficial, after the child or children graduate it is a good idea to consider consolidation all of the accumulated student loans.

Parent PLUS loan consolidation loans are the ultimate solution for parents who are knee-deep in debt trying to get the children through college.

Here in the United States, there is a federal loan program designed to enable parents to acquire education loans on behalf of their children. These loans are known as Federal Parent PLUS Loans. They can be taken out for every minor child a parent has, as long as the child is a dependent of the parent and is currently enrolled in an undergraduate university program.

Federal Parent PLUS loans are guaranteed by the United States federal government. Part of that guarantee ensures that the loans keep low interest rates. These loans are beneficial because they allow you to borrow toward all college expenses, like travel, housing, laboratory costs, tuition, and much more.

Determining the eligibility of a parent to obtain a parent PLUS loan is as simple as a credit check. Bad credit is really the only thing than can prevent a parent from being eligible for one of these loans. The general things they look for are payments that are more than 90 days late within the last five years.

Parent PLUS Loans are definitely more advantageous to parents because the interest rates were fixed at 8.5%, which can be tax deductible. This type of loan also requires no collateral.

Parents who are above their heads in parent PLUS loans can look forward to the benefits that parent PLUS loan consolidation programs can offer. Their debts’ accounts are simplified at the very least since they only need to pay a single creditor. Of course, if a parent took out federal loans and private loans, the said debts cannot be mingled into one, and they would have to pay a consolidated private loan and a consolidated federal loan.

Parents who took out PLUS loans can find some much needed breathing room with the PLUS loan consolidation program. The loans will still of course have to be repaid, but they will be much more manageable. Interest rates on these loans are calculated by the weighted average of all of the original loans, thus giving them a lower interest rate.

In most cases, parents get an incentive, i.e., Interest rates are reduced, if they set up their payment system on auto-debit. The prevailing interest rate on your parent plus loan consolidation can be tax deductible. As of the moment, taxpayers can get as much as $ 2,500 off on qualified education loans.

On top of these benefits, plus loan consolidation programs can also improve credit scores. Outstanding debts, especially if you default on them, can adversely affect your credit score. With an improved credit score, children of loaning parents can qualify for financial comforts beyond college, like having a place of their own or having a brand new car.

Parent PLUS consolidation loans have variable interest rates. These rates are usually computed by one month LIBOR average plus a small percentage of the total debt to be repaid.