<p>My understanding is as follows:</p>
<p>Parent Plus Loan - fixed 8.5% interest. Interest accrues immediately and loan in in parents name.</p>
<p>Private Loans - variable interest (is this always the case?) Is loan in parents' name or kid's name?</p>
<p>Basically, we're trying to figure out which loans would be solely in our son's name. Are there any, and is the disadvantage a much higher or variable interest rate?</p>
<p>Thanks!</p>
<p>Stafford loans - all students are eligible to take out Stafford loans upon completing the FAFSA…maximum $5500 for freshman and the amounts can increase as the student progresses through sophomore, junior, senior year. These are in the student’s name.</p>
<p>*Private Loans - variable interest (is this always the case?) Is loan in parents’ name or kid’s name?</p>
<p>Basically, we’re trying to figure out which loans would be solely in our son’s name. Are there any, and is the disadvantage a much higher or variable interest rate?*</p>
<p>If you’re talking about loans that are in addition to Stafford or Perkins loans, then your son will need a co-signer (since your child doesn’t likely have income/assets to qualify). If you co-sign, you are also responsible, and while the loan is outstanding, your credit is negatively affected.</p>
<p>So, if you’re thinking of having your child borrow more money than the Stafford/Perkins amounts…first of all…that’s a bad idea…too much debt…and secondly…you’d have to co-sign. The loans can’t just be in his name.</p>
<p>Plus loans do have a few advantages including loan forgiveness and the option to defer payments until after the student graduate. The former could be due to the death of either student or parent. Also, Plus loans are included in the public service loan forgiveness program (assuming there is a balance after 10 years, yikes!). The option to defer may allow a parent to borrow less by using more current income to pay tuition and paying the interest as it accrues will keep the debt from snowballing. Finally, the student doesn’t end up with such a high debt to income ratio which can make getting the credit they need to buy the first car, or even lease an apartment, difficult.</p>
<p>IF you, ther parents, decide to borrow for child’s education, there are other choices besides Parent Plus loans, some with lower interest rates.</p>
<p>About 3 years ago, we borrowed a few thousand toward one semester’s tuition for son.
We borrowed it through the NJClass loan program. It has a fixed rate, not variable, for I think 5.9%. Terms are different (less favorable) now but still pretty good.
This program is for NJ students attending college in any state.</p>
<p>I bet other states have similar programs…try googling.</p>
<p>Good point, musicmom! Many states do have them…NY finally started one last year but the interest is even higher than Plus (how they get anyone to participate is a mystery to me!).</p>
<p>sk8rmom, why would NY START a student loan plan and offer higher rates than plus?
How silly.</p>
<p>NJClass for this year looks to be 7.72%, it’s set each July.
I guess I’m happy with my 5.9%. Hope to pay it off in about a year anyway. But it’s nice that it’s fixed and automatically deducted from my checking each month.</p>
<p>Thanks for the input all. Yes, I’m aware of the Stafford loan and am talking loans over and above the unsub Stafford.</p>
<p>Musicmom, I imagine that that other loan might be for people who don’t qualify for the PLUS loan? I’ll check into whether my state has a program as well.</p>
<p>Back in the day, I borrowed a Guaranteed Student Loan for $5,000 per year (I think) and another $3,000 loan on top of that which I think was called the plus loan, so I had about $32,000 in debt upon college graduation, but it was all in my own name. I guess they aren’t offering as many programs anymore where the money is in the students’ name.</p>
<p>ReadyToRoll-</p>
<p>Probably each state’s program has different requirements.
The NJ one we used had no relationship to qualifying or not for PLUS loans.
We would have qualified for a PLUS loan but the NJClass loan was over 2 percentage points cheaper than PLUS.</p>
<p>Good luck, it’s a trip, isn’t it?</p>
<p>I don’t know, but can’t fathom why NYS does many things! Aaround the time it was approved last year the rate was over 10%! Unlike Plus loans, students can borrow for it, (with limits ranging from $10K for freshmen to $20K for junior/seniors) but they must have a cosigner.</p>
<p>Just checked it again and looks like they revised the rates recently, but still not enough to really make it an attractive option:</p>
<p>NYHELPs interest rates are subject to market conditions at the time of bond issuance. Borrowers will receive a fixed interest rate of 7.55%, 8.25%, or 8.75% on NYHELPs loans beginning with the spring term of the 2009-2010 academic year. The borrower fee for these loans will range from 4% to 8%. With a ten year repayment term, this will result in an estimated Annual Percentage Rate (APR) ranging from 8.78% to 11.19% depending on the credit rating of the borrower or his/her cosigner, the loan repayment option selected, and the student’s year in college.</p>
<p>Borrower fees of 4-8%? Yikes…
That’s really high!
I think the NJ loans are 2%.</p>