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Parents are able to help their dependents with higher education by securing student loans. There is often confusion on who actually has responsibility for these loans.

Private Parent Loans

There are both Private and Federal loans available to parents. If you have co-signed on a loan, you have a Private loan provided by a lending institution other than the Federal government. Think of this like a co-signed car loan. If the loan becomes delinquent, you ultimately are responsible for repayment.

Pros:
* Often have lower interest rates
* Many offer alternative loan term lengths

Cons:
* Do not offer flexible income driven repayment options
* Don’t offer any type of potential forgiveness

Federal Parent PLUS Loans

There are also Federal loans available to assist dependents. These loans are completely the parents obligation. Federal loans have multiple repayment and forgiveness options that are not available by Private lenders.

Pros:
* There are often multiple repayment plans available
* Income based repayment is possible so that payments are manageable and affordable

Cons:
* Interest rates are occasionally higher

Private vs. Federal Parent Loans

Generally, the Federal loans offer more flexible repayment plans and have potential forgiveness, while Private loans often have lower interest rates. Ultimately both should be considered to find the best options for your situation. If you already have loans, look “here” for repayment estimates on your Federal loans, or call and speak with a Pro who can review your situation and offer specific options and alternatives.

* Term lengths are set on the amount borrowed, but remember you can always pay more than is required, therefore shortening the term length and saving money in the long run.