<p>My parents took out a PLUS loan earlier in the year, they've made one payment on it. They want to change it to a Student Signature Loan (private loan) so that I can defer it until after I graduate. </p>
<p>Is this a good idea? They really like the idea of not having to pay until 3 years, but is the interest that is collected during this time just too much?</p>
<p>Look at the numbers on this page:
<a href="http://www.salliemae.com/get_student_loan/apply_student_loan/cosigning_loan/%5B/url%5D">http://www.salliemae.com/get_student_loan/apply_student_loan/cosigning_loan/</a></p>
<p>Note the chart that shows the student taking out a $10K loan - what interest costs and what the overall cost is over the life of the loan. </p>
<p>Unless meeting current payments are a hardship for your parents, as a family you will be better off to stick with the PLUS loan. Any time you have a loan of any sort where you are not at least paying off current interest, so interest accumulates and increases the principal -- it's a problem: the whole structure of the loan is that you dig a deeper hole of debt rather than beginning to get past it.</p>
<p>So I took out a PLUS loan for 10K. I still need to pay 4K, and I can either switch that to a private loan, or add it on to the PLUS loan. I'm guessing you'd recommend the latter?</p>
<p>PLUS loans typically cannot be changed once they have actually been certified and disbursed. In the original posting, it sounds like this is the case. Once the loan has been disbursed to the school, eithe rin whole or in part, it remains a PLUS loan until it is fully repaid. If, however, the loan has not been processed, you could always try to obtain the signature loans....but remember that most private loans are most costly than PLUS loans. Interest rates are typically based on credit score and can range from dirt cheap to over 16%.</p>