Am I incorrect on ParentPlus Loan?

Paying for College
1

<p>So now I am perusing loans for college, just finished with first child, and we are high fiving each other since he graduated on 4/11 and actually has a real job.
But looking for D with ParentPlus Loan this is what bothers me.</p>

<p>What are the fees for a PLUS Loan?
Parents are required to pay a 3% origination fee. A federal default fee of 1% may also apply. These fees are deducted from the principal at each disbursement.
(from the web site Plus loans FAQ)
Each disbursement is one semester, or two per year, if I am correct than the origination fee is actually 6% per year plus the 7.8%.</p>

<p>But as they indicated , dont worry we will just wrap the extra expense into the loan.<br>
Sounds like the used car business to me, except with a depreciable asset, vs no collateral.</p>

<p>I have also looked at the Collegiate Loans with parents cosigning and although they indicate 3.5% - 9% with variable interest rates, no one seems to be able to answer , who gets 3.5%. We received 6 3/4% (which is less than the normal 7.25% since we are in their banking familty) with last years FICO score of 803.</p>

<p>Luckily, we can borrow funds from my son, since his no collateral education costs have translated into 5 figure taxes for this year. No wonder this country is in bad shape</p>

2

<p>If you want to sit and do the math, you can go ahead and do that, and work out exactly what you need to borrow with all fees taken into account. As for private loans, what interest rate you get is determined by your credit score, and the actual numbers of debt, monthly payment and income, not just your credit score. If the lenders are operating like a lot of lending institutions these days, hardly anyone, if anyone is getting their prime rate. They’ll be looking for any and every reason not to give it to you.</p>

3

<p>

The origination fee would be on the amount disbursed, not on the total assessed two times. IOW, if they disbursed $10K in the fall and $10K in the spring, they would not charge a $600 origination fee (3% OF $20K) both times.</p>

<p>Additionally, an origination fee is only charged at the beginning, not every year.</p>