Parent Plus Loans are underwritten by the federal government and are popular with parents who want to borrow to help pay for their children’s education. These loans allow families to borrow without regard to their ability to pay. They generally carry higher interest rates than students’ loans, and come with fewer safeguards should a family’s financial situation take a turn for the worse.
Only a basic credit check looking for adverse events is required to get one.
The typical parent borrows $24,416 in PLUS loans and many borrow much more for expensive private colleges.
If borrowers default on or consolidate their loans, or if they receive a forbearance or a deferment that pus the payments on hold, the interest that accrues is capitalized. That means it is added to the principal balance, pushing payments higher.