💰Understanding College Costs - PART 3: LOANS💲

Sasha.F

Hi Parents and Guardians! I was recently asked my thoughts on loans and wanted to share my answers here for part 3 of our "Understanding College Costs" series. Let me know your thoughts, and if you have additional questions down in the comments section!

What are your thoughts around, like parent plus and the graduate plus loans and things like that?

"Avoid Parent PLUS loans if possible. There are a couple of reasons for this. First, you'll typically start repaying them immediately. Second, they often have some of the highest interest rates. Additionally, a credit check on the parent is usually required, or a cosigner may be needed. It's generally better to keep the loan within the student's name rather than involving others in loans that may not be as favorable. Subsidized student loans are usually a much better option and often better than private loans from a bank. If you find yourself needing Parent PLUS loans, it might indicate that the school is too expensive. There are many other affordable options to consider. If you've exhausted all other options, including student loans, and still need a Parent PLUS loan, there are likely more affordable alternatives available."

What are your thoughts on private student loans? How can we make sure our parents and guardians and students are set up for success if they have to go that direction?

"If you must pursue private student loans, be aware that they lack many of the benefits associated with federal student loans. For example, federal loans offer forbearance, which allows a temporary pause in payments after graduation. Additionally, programs like Public Service Loan Forgiveness, which forgive federal loans for those working in public service, do not apply to private loans. Private loans also affect your credit score differently than federal student loans. As long as you make timely payments, federal student loans generally don't negatively impact your credit. However, private loans can affect your credit score.

Given these considerations, I strongly encourage students to explore more affordable options. There is no shame in starting at a community college for a couple of years to complete credits at a lower cost before transferring to a four-year university. If you're in high school, consider dual enrollment, dual credit, AP classes, or state seal programs to earn college credits early and reduce future expenses." Sasha F.