<p>Is there any advantage to using a Parent Plus loan over a credit card when paying for tuition? The interest rate on my unused credit card is the same as the rate for the Plus loans. I know that credit card companies have been jacking up rates at their will lately so that is one reason. Are there any others? I remember reading somewhere about consolidating Plus loans down the road after you are done taking them out. What about implications for tax credits?</p>
<p>Credit cards are virtually never the best option – even if their interest rate is currently at or lower than the PLUS loans, there is no guarantee (or even much chance) that they’ll stay that low. Plus, when you pay interest on a PLUS loan the interest is federally tax deductible, which isn’t true for the credit card. Also, credit card companies have been arbitrarily cutting back credit lines without much notice to people – even people with good or excellent credit – who happen to live in an area with a high rate or defaults or foreclosures. The new rules limit that a bit, but not very much. Finally, almost all credit cards charge an upfront free of 3-5% for the privilege of using a convenience check or cash advance, so the actual interest you’ll pay will almost always be higher than the nominal rate.</p>
<p>Thank you!</p>