<p>I'm having trouble wading through the options and trying to figure out which is a better plan. After the unsubsized Stafford loan, son needs to also take out additional loans. The only ones available to him are the Sallie Mae loans, private loans, and a loan program within our state that provides a fixed rate in the 6.8% range. I don't see any kind of cap on the variable rate loans, which makes me worry that in four years they could be up to 12 percent! Of course, they are very low now. They trigger off of the LIBOR rate.</p>
<p>I believe all the loans require interest repayment while in school.</p>
<p>Did you look at finaid.org and all the info there? </p>
<p>I would certainly avoid Sallie Mae at all costs, have heard nothing but negative stuff regarding Sallie Mae from my kids’ friends. With the private loans the interest will accrue while he is in school, you have the option of paying the interest while he is in school. </p>
<p>On the other hand if you qualify for a PLUS Loan you will be able to deduct the interest you paid off your AGI on your 1040 on your taxes. Line 33, Student Loan Interest, there is a cap on the amount you can use. At least with a PLUS loan you are borrowing from the government & the terms seem reasonable as opposed to a private loan for your child.</p>
<p>With a private loan in your child’s name, you will not be able to use that interest on your tax return, but he can. I see that a lot in the tax office I work in.</p>
<p>The interest deduction is not limited to government-sponsored loans. Private sudent loans also qualify. The amount of your student loan interest deduction will be phased out if your modified adjusted gross income is between $55,000 and $70,000 ($110,000 and $140,000 if you file a joint return). You will not be able to take a student loan interest deduction if your modified adjusted gross income is $70,000 or more ($140,000 or more if you file a joint return).</p>
<p>If any experts can take a look at it and see if there’s something I’m missing…but I like that fact that the rate is fixed and I think it is government sponsored.</p>
<p>Even private loans require co-signing by parents. </p>
<p>We won’t qualify for the deduction anyway, based on the AGIs listed by imgdoc above, and I don’t think the deduction can be transferred to the student but I may be wrong…</p>