<p>If you can get a good deal on a private loan, take it. The PLUS program makes it much easier for parents. You apply on line–it can take minutes, the approval comes back relatively quickly and the school is in synch with you. There are also many payment options with these loans that may not exist with private loans.</p>
<p>But if you can get a fixed rate loan that is a better deal. Take it. We borrowed from our 401K last year rather than going through PLUS because of the favorable interest rate we got. But we are also returning the loan faithfully on schedule over two years rather than stretching it out. Also, we now have that much less in our 401K to borrow if something comes up. If we don’t repay the loan on schedule, we run the risk of having an adverse tax event. Still, I wanted to go this route, because I budgeted repaying the amount over two years, in hopes that we won’t need another loan during that time, and could save on the interest and origination amounts. When this loan is paid off, we’ll have two in college, and I anticipate taking a huge PLUS that year which we will have to pay off over 10 years. But that one year loan for our son from last year will be out of the picture instead of having another PLUS added to the mix.</p>