Parent Plus Loan information and experiences

twoinanddone
Fri, 21 Jul 2023 18:44:16 +0000

Spring4:

and with hundreds of thousands of dollars in parent plus loans that they signed on to without understanding interest capitalization is a socially derelict outcome on the part of the colleges offering them.

PPLs are the payday lending of higher ed funding, with less regulation, funded by general federal revenue.

Federal loans are at simple interest, not compounded. The only compounding takes place when loans are consolidated and any unpaid interest is added to principal. One can avoid that by paying the interest as it accrues.

The loans are as regulated as any government loans. The servicers are also regulated and supervised (audited). Most Plus loans have an interest rate below 10%. Payday lenders often have APRs in the 175% range so saying PPLs are the same as payday lenders is not exactly accurate. Even credit cards these days are at 29%, and are definitely compound interest, so a 10% rate on an unsecured loans is a pretty good rate.

Look, you don’t have to take a PPL if you don’t want to. Your children can’t take one since they are PARENT Plus loans, and the other loans you are referring to like Sallie Mae and Discovery are regulated and the terms will be explained to you with the Truth in Lending box on the loan just like on any consumer loan. If you don’t like the terms or the repayment schedule, don’t take out the loan.

I didn’t take PPLs or private loans for my kids. My kids took the Direct loans (not the max) and one took a Perkins loan. One chose a very affordable school and the other was at a private school but with scholarships that were close to the COA. Both would have preferred to go to college in California but we couldn’t afford it.