The Hidden Dangers of Parent Plus Loans

Warning: Do Not Participate in Parent Plus/Direct Plus Loans

As a graduating high school senior, I was begging my parents to take out a Parent Plus Loan so I could have a bigger tuition budget, and be able to attend my dream school far away from home. For more than one reason, I am very glad they did not listen to me. This biggest reason is laid out in this article. Labeled “the most irresponsible form of government lending” talks about how income and repayment capabilities are ignored when granting the loan.

A few more highlights from the post:

1. The responsibility of the loan remains with the parent and can never be transferred. Even in retirement, wages could be garnished and assets seized to collect the debt.
2. It is almost impossible to have these loans discharged in bankruptcy.
3.  The interest rates have historically been much higher than federal loans granted to students
4. Although loans to students aren’t repayable until after graduation, loans to parents become due as soon as they are disbursed.

Click the link below to read about the dangers Parent Plus loans carry:

http://www.dailyfinance.com/2015/07/16/how-to-survive-predatory-parent-plus-loans/

Written by: Caitlin Distelrath