My daughter is a rising sophomore at a top LAC. Her first year of school was paid with a 529 account/savings. Going forward, her COA for years 2, 3, and 4 will be approximately 20k after financial aid and Stafford loans. We can afford about 5k/year out of pocket, so the total cost we/she will need to borrow will be about 45k (less whatever she earns between now and graduation). She understands that this amount will be her responsibility (even if she has to live at home, while working, after graduation for a while). However, we will still either need to be the borrower or cosigner. With that in mind, do we look at Parent Plus, Sallie Mae, a private loan through USAA/Wells Fargo, NJ Class? We have very good credit and want it to stay that way. Any thoughts appreciated.
She should borrow $6500/$7500/$7500 as Stafford loans, which will then leave approx. $8000 per year. Look to see if your state has any programs for student loans. If not, the Parent Plus would probably be the best deal, but those loans would be in your name not hers. If you really want the loans in her name, then you need to look at the other programs and you’ll be the co-signer. If you are a co-signer, the loans will still be on your credit rating, but that doesn’t mean it will be ruined, and might even help if all payments are made as agreed, but the debit ratio might lower your score a few points.
There is a specific parent plus loan thread with some discussion you might be interested in.
You might get more replies in the Financial Aid forum. There are a few parents who did loans and a similar question there now.
But if she is already taking her student direct loan, adding 45k is pretty steep, ouch. I hope there are a lot of jobs in commuting distance from your house. Are you sure it is wise to let her do that? Most students have no idea what that level of debt really means. Just food for thought, no nee to reply.
And the parents made a thread about Plus loans
http://talk.collegeconfidential.com/parents-forum/1498510-read-this-before-you-take-out-a-parent-plus-loan.html
$20K/year “gap” –
$5K - parents able to contribute
Are you eligible for the American Opportunity Tax Credit of $2,500/year?
Students can generally work (and save towards the cost of college) $2500 in the summer if living at home, if you’re not in a rural or economically depressed area. Some summer jobs make that feasible even if a student isn’t living at home, but that varies a lot.
Students can generally work during school and earn at least $2K/year and apply that to personal expenses and books.
Sophomores can take $6500/year in direct student loans.
With the American Opportunity Tax Credit that comes to $18,500. Without it, $16K.
Discover has a student loan (requires a co-signer) that might be worth considering. Rates and terms looked better than Parent Plus loans.