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Updated on Thursday, May 12, 2016
If government college loan options for your kid have you considering packing up and moving to another country, private lender Sallie Mae has rolled out a new alternative to the federal Parent PLUS loan (or the government’s most profitable student aid program).
While in the past federal loans have been applauded for their fixed interest rates and repayment options (although federal parent loans are only eligible for the income-contingent repayment plan), lately many parents have found federal options to be lacking and complain of issues like high fees and minimal protections.
If you’re a parent looking into your options for helping to put your child through college, consider some of the following details to the new Sallie Mae plan:
- There are no fees associated with originating or dispensing a new loan, and these loans are available to all creditworthy adults, not just the student’s parents.
- Fixed APRs as low as 5.49% are available, but they may climb to 13.87% (variable APRs start at 3.50% and can climb to 13.12%), based on the borrower’s credit.
- Two repayment plans will be available for the new parent loan: the first allows people to make monthly interest payments for up to 48 months while the child is enrolled in school (followed by principal and interest payments), or they can opt to pay down the principal and interest together while the child is in school and through the life of the loan. The company also promises to work with low-income families who are struggling to repay their debts.
- The Sallie Mae loan covers up to 100% of school-certified costs of attendance.
To see how the parent loan compares Sallie Mae’s Smart Option Student Loan, click here. For more on times when private parent loans trump federal options, check out this piece. If you’re currently saving in a 529 to help put your child through school, read this piece about three alternatives that might work better.