Parent Plus Loans...anyone have any positive or negative experiences with these?

Paying for College
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I’ll be going with Parent Plus loans for my kids. Anyone have any positive or negative experience with these?

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In case you weren’t aware - there was just a discussion about that:

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The interest rate is 8.05% and there is also a steep 4.228% loan fee on top of that. Are you unable to secure a private loan with better terms?

https://studentaid.gov/understand-aid/types/loans/interest-rates

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I am a big advocate of federal loans first for students. There are some good protections that private loans don’t have. For parents, though, they aren’t always the best choice. Plus: If you are still paying your own federal student loans, the parent loans can be consolidated with those. Plus: If your child dies, the loan is forgiven. Minus: High interest rate; origination fee (you get less than what you borrowed but pay interest on the fee the government retains). If you can get a better interest rate & no origination fees with a private loan, that may be a better choice. If not, though, the parent plus is a valuable option to help pay for college. Just please be careful not to borrow any more than absolutely necessary due to the high cost of borrowing.

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This sounds like multiple kid Parent Plus Loans. I would be very cautious not to over borrow because you are required to do the repayment…and that can end up being very costly every month for a long time.

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Also, and please correct me if this is no longer the case, if the parent becomes disabled the Parent Plus loan is forgiven. This happened with my parents, but it was way back in the day.

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Yes, that’s also a benefit. Thanks for pointing that out, as it may be an important consideration (particularly for an older borrower or one who has health issues).

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“Some private student loans provide a disability discharge that is similar to the TPD Discharge for federal student loans.”

“Some of the lenders offering a disability discharge on private student loans provide a disability discharge on private student loans that is more generous than the disability discharge standard for federal loans. For example, some of the lenders will discharge private parent loans if the student becomes totally and permanently disabled, not just if the parent borrower becomes disabled.”

If disability/death benefits are important choose a loan with those benefits in the terms (not all private loans do), but be aware that “Less than 0.5% of borrowers qualify for a disability discharge each year, even though about 5% of borrowers have a severe disability, based on an analysis of government data.”

And before you take on debt, run the numbers.

https://finaid.org/calculators/loanpayments/

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That loan calculator I posted above isn’t as good as it used to be when it also included the income levels that were likely to be required without distress to service the debt.

I found this one Student Loan Calculator (2023) - Estimate Your Loan Repayment | SmartAsset.com and it is a bit easier to use, but it doesn’t have a good way to add the fees or tackle income to debt ratios either.

Does anyone have a better/easier/more intuitive calculator?