<p>My son will be a freshman this year at a top-notch $57K/year college.</p>
<p>We applied for a co-signed Sallie Mae Smart Option student loan to cover part of the first year’s tuition. Our thinking was this:</p>
<p>Parent Plus student loan = 7.9% fixed plus 4% origination fee.
Sallie Mae Smart Option student loan = LIBOR + 2%-10% variable plus no origination fee.</p>
<p>With LIBOR expected to remain low for quite awhile and with ways to pay off the Smart Option loan if LIBOR pops up before we can naturally pay if off, it seemed like a much better deal, assuming we’re at the 2% end of the spread.</p>
<p>We (i.e. the parents) make a lot of money with correspondingly high expenses, we have little debt outside our mortage, and our credit score is around 800. We both have long-time stable jobs and we have significant home equity.</p>
<p>Sallie Mae just offered us a loan at 8.625% (LIBOR + 8.375%)! It was an AFLAC moment. I wasn’t able to draw any kind of sensible answer out of the customer service rep about how that could be and why ANYONE would take a variable rate loan that exceeds the fixed rate Parent Plus loan. Her only comment was that they take into account our son’s credit too (which is almost non-existent much like almost every other kid going to college).</p>
<p>Has anyone on this thread received a private college loan anywhere near LIBOR + 2% and if so, where did you get it? I suspect the “LIBOR + 2%” quote doesn’t actually happen in real life.</p>