Are any financial aid programs tailored especially to parents of post-secondary students?
Although the bulk of financial aid is awarded directly to students, one major federal financial aid program is available to assist parents with their share of post-secondary (beyond the high school level) educational expenses. This program is known as the Parent PLUS Loan.
PLUS Loans are available to any creditworthy parent of a student matriculated at least half-time in an undergraduate degree or certificate program offered by an accredited post-secondary educational institution. Graduate and professional students can borrow under the PLUS Loan program too (these loans are called GradPLUS Loans). PLUS Loans are not limited for use only at colleges; they may also be used for post-secondary vocational or trade program expenses. These loans may be granted by a private lender or directly by the federal government. Completed loan applications are forwarded by the parent to the financial aid administrator of the student's school for certification and further processing.
The limit that a parent may borrow for any single academic year is the cost of education (which may include tuition, fees, room and board, books, and supplies), minus any other financial aid received. Thus, if the cost of education were $30,000 and the student received aid totaling $10,000, a parent would be eligible to take out a $20,000 PLUS Loan.
The interest rate on PLUS Loans issued before July 1, 2006 is variable (adjusted each July) and is capped at 9 percent. The interest rate on PLUS Loans issued on or after July 1, 2006 is fixed at 8.5 percent. Interest begins accruing upon the first loan disbursement. Disbursements are made directly to the school, usually in two equal installments. Repayment of the loan must begin within 60 days of the last disbursement for that academic year. In some cases, PLUS Loan repayment may be deferred or forgiven; such consideration is usually given only in cases of the parent's death, total disability, or return to school.
Parents would also be well advised to investigate other alternatives, such as employer reimbursement programs. Some such programs pay reimbursement costs for the educational expenses of the children of the employee. State employees may find that their family members are eligible for free or reduced tuition at state educational institutions.