Jul
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dan s asked:
Hi everyone,
I will be attending a 4 year school in the fall.The school uses the Federal Direct Stafford Loan which I can only get unsubsidized. Tuition each semester is $9500. After a $2000 scholarship and the Federal direct stafford loan I will still owe $4750 each semester. Is there any advantage to getting a Direct PLUS loan over a private loan to cover the rest of the funds. My parents have good credit history and are willing to cosign or borrow in their name. I have noticed the direct PLUS loan has a fixed intrest rate of 7.9% and the payments on the principal begin almost immediately. This rate seems kind of high. If I apply for a private loan with my parents backing is their a chance I can get a better rate and only pay intrest on the loan while in school not the principal? I have read avoid taking a private loan at all costs. Is this true ? should I stick with the PLUS?
Sphere: Related ContentHi everyone,
I will be attending a 4 year school in the fall.The school uses the Federal Direct Stafford Loan which I can only get unsubsidized. Tuition each semester is $9500. After a $2000 scholarship and the Federal direct stafford loan I will still owe $4750 each semester. Is there any advantage to getting a Direct PLUS loan over a private loan to cover the rest of the funds. My parents have good credit history and are willing to cosign or borrow in their name. I have noticed the direct PLUS loan has a fixed intrest rate of 7.9% and the payments on the principal begin almost immediately. This rate seems kind of high. If I apply for a private loan with my parents backing is their a chance I can get a better rate and only pay intrest on the loan while in school not the principal? I have read avoid taking a private loan at all costs. Is this true ? should I stick with the PLUS?
Tags: Advantage, Credit History, Direct Loan, Federal Direct Stafford Loan, Intrest Rate, Parents, Path, Private Loan, Scholarship, School Principal, Student Loans
July 28th, 2008 at 1:34 am
I would definitely stick with the PLUS loans. Just find out if your parents expect you to make the payments on those PLUS loans. 7.9% is not THAT high, but it probably wouldn’t hurt to see what sort of loan you might be able to get from your local bank (like wherever you have your checking account). They might be able to give you a better rate, but you never know til you try.
Avoid the private student loans offered by Astrive and such, they are generally a rip off. They try to get you to take out more than you need. You might also want to consider getting a job to help pay for your tutition. That could also help defray some of the costs.
Good luck.
Hope this helps.
July 31st, 2008 at 8:48 am
I would definitely recommend the Direct PLUS loan over private/alternative loans. PLUS loan is fixed whereas private loan can fluctuate, going as high as 19%. One of the good things about a Direct PLUS is that since they are considered under the US Dept. of Education, your parents can get a forbearance or postpone payments if they need to at any time. You never know what happens in life so this is a benefit for your family in case someone gets laid off or becomes ill. If you are concerned about the interest rate, your parents have good credit so they may be able to apply for a Home Equity Loan where interest rates are based on credit and are as low as 4.5%.
So your options are Direct PLUS or Home Loan.
NEVER PRIVATE OR ALTERNATIVE LOAN.
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