Monday, April 6, 2009

Flexible payment terms for parent college loans

Posted By C. Brown

As if parents of teenagers didn't already have their hands full, the stock market meltdown has brought new financial stress to the relationship.
Not only are parents recalibrating what they need to save for retirement given their freshly decimated 401(k)s, they're also wondering how they'll cover looming tuition bills given the equally dismal performance of their 529 college-savings plans.
One solution may be the retooled federal parent PLUS Loan program. Congress last May loosened the payback rules for PLUS loans in an effort to help more families juggle college costs and other expenses.
Under the new law, parents who take out a PLUS loan to cover a child's college tuition can wait until their kid is done with school before beginning to repay the loan.
Previously, the program required parents to start repayment within 60 days of the loan being issued. That meant a cash-flow crunch for many parents, who found themselves having to pay for the PLUS at the same time they were paying for other college costs out of their monthly income.
With the new flexible repayment rules, families strategies how to pay for college might want to give PLUS loans a fresh look. Here are the key points to understand about the Federal PLUS loan program:

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