<p>We may have to avail loans in excess of federal stafford loans in 2012. The current rate of Parents PLUS loan is 7.9% fixed + 4% origination fee. Considering parent has very good credit history and score and is willing to co-sign, how and where can a student get a lower rate loan? Any input is appreciated.</p>
<p>Thanks</p>
<p>Parent Plus loans are parent loans…not student loans…the parent is responsible…the parent isn’t co-signing, the parent is signing.</p>
<p>If you’re looking for loans that your child will be responsible for repaying (with you co-signing), then you can look at Sallie Mae…maybe Discover.</p>
<p>Keep in mind that your child will already have full student loans in his package (up to about $30k or so at graduation), so having your child borrow more each year may make it difficult for him to repay upon graduation (while also paying for all his living expenses).</p>
<p>Also, you will have to requalify each year, and each year that you co-sign your credit will take a hit.</p>
<p>I may be in a position to help him repay it later. </p>
<p>I do not want to take a loan at a very high APR (and origination fee) as in parents plus. I looked at discover, it is a variable interest rate loan. Any other low interest options for the student (with me as the co-signer)?</p>
<p>Do you belong to a credit union - that might be a source for you (or your student). If it’s not a ton of $$ maybe the student can find a summer job. We know young man who took a third shift factory job each summer with premium shift pay and was able to knock out a substantial amount of money each summer. Many kids will struggle with more than the federal direct loan paybacks if they max out the federal loans. Is the student almost done with college or is this a multi-year shortage?</p>
<p>momofthreeboys,</p>
<p>Thank you for the CU idea. Yes, I am a member of a credit union. Will check with them. </p>
<p>He would need it for two years. It is basically coming down to either postpone my retirement contributions (I am already way behind) or take a loan. Summer jobs may be an option, but we are also trying to knock off a semester by enrolling for summer courses at a local college this year. That’s still in the air though.</p>
<p>A very low cost option for the parent is a second mortgage. Mortgage rates are very low right now.</p>
<p>But as others have said, that would be your loan.</p>
<p>Unless the homeowner has PLENTY of equity in their house right now, commingling mortgages and college loans is a decidedly bad idea. You can always defer or rework the terms on a Parent PLUS loan. If all of a sudden, you lose your job and/or your home’s value drops another 20% and you have to miss a couple mortgage payments, you’re dead in the water.</p>
<p>I am rather looking for a loan that the student can take with the parent as the co-signer. I hear people talking about student loans that are at 3.5% etc, and was curious.</p>
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<p>How does one go about this? I thought the rate was fixed for this loan.</p>
<p>If you’re looking for your son to take out a loan without you having to cosign for it, you’re not going to have a lot, if any, options. Since cosigning is legally obligating yourself to pay a loan, there is not a lot of difference between you taking out a loan and having your son cosign it. </p>
<p>One of the first things that financial planners say is to not borrow against your retirement. While it might cost more in the short run to take out loans, loans are likely a better option.</p>
<p>Depending on your credit score and how soon you might need another loan, consider putting the amount on a low-interest, fixed rate credit card. As unsecured debt, it can be discharged during bankruptcy should that ever become an issue. Having lost of unsecured debt will likely affect your credit score, but if you can get approved for a large enough amount, you’re only applying once.</p>
<p>A lot of the 3.5% interest rate loans are either variable rate loans or are tied to a home or automobile. Before student loans became fixed-rate loans, people were able to consolidate their variable rate student loans into very low fixed rate loans (think 1-2% interest rate with 20 year payments), but that is not an option for current students.</p>
<p>For private student loans in the student’s name, that you cosign, there are many lenders, if you decide to go that route. Finaid has one list of lenders:
[FinAid</a> | Loans | Private Student Loans](<a href=“Your Guide for College Financial Aid - Finaid”>Private Student Loans - Finaid)
College financial aid offices often have a list, and local banks/credit unions may offer loans.</p>
<p>Some lenders offer fixed rate loans (usually in the Parent PLUS range, so I don’t see the advantage), but most will be variable rate, quoted as a range, and pegged to the Prime Rate or LIBOR. That’s where you’ve probable heard the 3.5%, because they are advertised as “as low as 3.5%” etc. That means little.</p>
<p>The lender will not tell you YOUR rate until after you complete the full application (very time consuming), and how they determine the rate they offer is mysterious. By law, they are now supposed to tell you, but they may not. Theoretically your rate should bear some relation to your credit score and/or the student’s credit score–i.e. an excellent credit score(s) should get you a quote at the bottom of the range. But I didn’t find that to necessarily be the case. Different lenders will probably quote you different rates, so try another if you don’t like the quote from the first. In my experience, there wasn’t a lot of rhyme or reason to it, and Sallie Mae quoted us the worst rate. If anyone’s ever gotten that magical 2.25% rate from Sallie Mae I’d love to know how.</p>
<p>Lenders will often give a lower rate if you pay interest during school, have the payments automatically withdrawn from an account, or if you have another account or loan with them. Some give graduation discounts/small bonuses; some will release the cosigner after a certain period of on-time payments (e.g. 24 months)</p>
<p>Search private student loans in CC for mentions of some specific lenders people have liked; we went with Citizens.</p>
<p>Arutha–you cannot rework the INTEREST RATE of a loan unless you take multiple PLUS loans and consolidate them into one, which gives you more or less an average rate. But, you can–depending on the lender–change the length of the loan, making it longer or shorter. FYI, shorter is probably not a good idea. You’re much better off, as has been discussed in other threads, to make extra payments by check–even if you pay online–and designate that extra check to be ‘for principal only’. This gives you extra breathing room if financial circumstances change for the worse.</p>