<p>Yes, for us the lion’s share of costs are coming out of current income. Due to a somewhat complicated family situation (buying a family business from my siblings) in the last eight years we have been living on a lot less than our AGI. Very fortunately for us, the payments to my siblings are finished because we have finished buying the company, so that stream of income is now going for tuition. </p>
<p>So yes, I can see that if you have to get loans or are paying out of savings the payment plans might not make a lot of sense to you. But if you are paying mostly out of current income it is enormously helpful.</p>
<p>Classof2015 - over the past couple of years, several of us here have gone the private loan route. The Parent Plus Loan has a pretty high interest rate PLUS (no pun intended) hefty origination fees. Parents with very good credit ratings can do quite a bit better. Yes, the interest rates are variable, but I don’t see the prime rate increasing much in the short term, since the economy is in such crappy shape and not likely to improve any time soon. Especially in situations where a loan is needed for a relatively short term due to cash flow issues, a private loan can make a lot of sense for parents with very good credit. We (and others here) have taken out private loans in the student’s name, with the parent as co-signer, BUT with the full intention of us parents being the ones responsible for the debt, paying interest as it accumulates and paying it off fairly quickly - at least within a few years of graduation. Once you’re no longer paying out your EFC, making loan payments should be a piece of cake. For those uneasy with this situation of the loan being in the kid’s name, two possibilities: 1) specify in your will that first thing paid out your estate will be to fully pay back this loan, thus freeing your kid of this loan 2) Wells Fargo offers a Parent Loan for education, with similar rates to their student loan. Downside of the parent loan (rather than student loan w/ parent cosigner) is that payments on the loan start right away, meaning that you’ll be making tuition payments and loan payments simultaneously. With student loan, payment begins after (6 mos after, IIRC) graduation. </p>