<p>My daughter will be attending an out of state school this year, and her Stafford loan will only cover a small portion of her tuition/fees/etc.</p>
<p>We're trying to figure out the best way to finance the difference. Currently, we have parent plus loans for our son's college (he just graduated), and I'm trying to decide whether to go that same route, or to get an equity loan for this year. Or, to refinance the house since interest rates are so low (not including the tuition in the refinance, but just to lower our monthly payment and increase our monies available to pay whichever loan we decide on)</p>
<p>We can get an equity loan at about 4.49%, vs the parent plus loan rate of 7.9%. Basically, if we finance for 10 years, the difference per month is somewhere around $30...... (we'll be financing between $15 and $20k)</p>
<p>Any advice is appreciated! Please, no comments on her/our decision to let her go out of state - it is her dream school, and we made the decision to let her follow her dream. </p>
<p>Thanks!!</p>
<p>I think with a Plus loan, if either the parent or student dies, the loan is forgiven. I don’t think that’s the case with the equity loan…but you could take out life insurance as an alternative. </p>
<p>Are you saying that you’re borrowing $15k-20k total? Or that much each year? </p>
<p>BTW…it really wasn’t necessary to mention that your D was going OOS. I can understand not wanting comments, so why even mention it? Why not just say, we need to do either a Plus or equity loan for X amount, which is better and why?</p>
<p>I would recommend refinance with additional principle. That gives you the lowest rate.</p>
<p>We have taken PLUS loans at a higher rate instead of HELOC’s, chiefly because I believe it’s not a good idea to mix education loans with loans on your place of residence, unless the homeowner has a ton of equity that would still be there if the housing market dropped another 30-40%.</p>
<p>Different strokes, different risk tolerances…</p>
<p>If the home loan is at a lower rate and you don’t plan to sell it, I don’t see a downside</p>