Anyway, parents need to be cautious when they agree to these loans.
One situation I read about finds a parent unable to continue making the interest-only payment for her current college junior (Child1). The family now has another child in college with a similar loan situation. The interest-only payment for Child1 has now risen to $500/month and the interest-only payment for Child2 is currently around $130. The combination is too much for the family…and will be around $800+ per month next year…again this is interest only!
These loans (and other cosigned offerings) can seem like the answer to one’s prayers when parents want to give their child the school the child of their dreams, but few seem to read the “fine print” or look at the projected payments once more loans are disbursed.
And it goes without saying that any time parents cosign loans or take out Parent Plus loans with the “promise” that the child will pay them back, please look at your child’s potential earnings upon graduation. There’s a thread in this forum about students (and likely their parents) who overestimated their future earnings.