Plus Loans vs Sallie Mae Smart Loans

Parents Forum
1

<p>Does anyone have any clue on one program vs another? At this point we are too rich to be poor and too poor to be rich! Our son is a top student - got into great schools with some scholarships - most about half tuition, but our EFC is over the cost of all of his schools, so no financial aid. Still needs quite a bit $$$ - so we plan to borrow the rest. He will take the max unsubsidized loan and we had planned to use the Parent Loan for the rest with the understanding we would pay while he is in school and he will pay when he graduates. We do understand the risk! :) </p>

<p>I was reading about the Sallie Mae Smart Loans and I like this option because he can also be on the loan and once he is gainfully employed we could potentially be released from the loan. This is most appealing to us since he has many siblings behind him and we don't want to be on the hook for $1MM in student loans!</p>

<p>Please share any knowledge on these options - thanks in advance!</p>

2

<p>The student loan providers essentially lost the federal loan programs in 2006 when the Democratic Congress with the support of the Republicans and Bush raised the interest rates to 6.5% and 8.5% for Stafford and PLUS. The lenders were no longer able to make money by the spreads and thus could only lend a privately, nonguaranteed loans, and to make whatever loan conditions that they wish. This week (?) the Stafford and PLUS can only be funded by the Government at a minimum cost savings of $61billion (over 10 years). I seem to remember that if the program was enacted in 2009, the savings for 2009 alone would be +$10billion.</p>

<p>from Sallie Mae website, A Smart Loan is an unsecured loan. Conditions and rates are set accordingly as unsecured. Good Luck.</p>