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When Federal Student Loans Aren’t Enough: Parents Taking Up the Slack

federal student loans
  • Aug 6 2018

Whether you went to college or not, you probably have high hopes for your own children; in fact, you may have been envisioning where they would seek higher education since before they were even born. Leaving high school and moving onto to working on a four-year degree can offer such a rich experience. Students not only gain classroom experience and more advanced knowledge, but they also mature in social and intellectual interactions on campus, learn to be more independent, and become ready to enter the real world.

Financial realities usually hit long before students leave college, however, as they realize how much funding is required to pay for rising college tuition in the US. While there are numerous scholarship and grant programs available to students of all ages, student loans are often required also. It is usually recommended that federal student loans be explored first as they generally offer so many more financial benefits to students (especially those who are younger and may have no credit), as well as flexibility later if there are issues with repayment. Private student loans, if it is possible to acquire them, may be needed to fill in the financial gaps if tuition still cannot be met. But sometimes even that is not enough, and you may have had the experience of your older children turning to your for help either with cash assistance, a loan from you, or co-signing on a private student loan.

Recent data shows that the number of Federal Parent PLUS loans continue to grow, right along with the cumulative student loan debt in the US of $1.48 trillion. Students take out as much as they can for student loans, and many parents are left to pick up the rest of the tab.

“More student loan borrowers are reaching these loan limits,” says Mark Kantrowitz, who analyzed data from the National Postsecondary Student Aid Study.

In the case of a parent who is not able to take out a PLUS loan, dependent students may be granted access to larger amounts of funding. Interest rates are generally though than those for conventional student loans, at over 7.5 percent with origination fees added on top of that. This is in comparison to a Stafford loan at 5 percent with a nominal origination fee.

If you are concerned about student loan debt, contact Fitzgerald & Campbell, APLC now. Our experienced student loan debt attorneys will be glad to review your case and discuss all the available options with you. Our attorneys have decades of experience in serving clients as they navigate through challenging financial situations, to include student loan issues, bankruptcy and other debt management processes. We are here to help! Call us today for a free consultation at (855) 709-5788 or email us at info@debtorprotectors.com.

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Posted in: Student Loan Debt