Paying for College: Parent PLUS Loan, Alternative/Private Loan, or Other Options: Which Should I Choose?
The policy of Messiah University has always been to allow a family to choose the payment or loan option which is best for them. Families want to secure the lowest interest-rate option or the best possible deal. We want to provide you with some important points to consider when making your choice. Please be aware that this is not a comprehensive list of payment options.
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Paying for College – Comparison of Some Options |
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Parent PLUS Loans |
Alternative/Private Loans |
Home Equity Loan or Line of Credit |
Retirement Accounts |
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**Government interest rates are set each year. Please contact the financial aid office for the current rate @ finaid@messiah.edu |
Fixed or variable interest rates |
Fixed or variable interest rates |
May be eligible to take a loan or withdraw from 401(k) or 403(b) |
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**Government interest rates are set each year. Please contact the financial aid office for the current rate @ finaid@messiah.edu |
Most loans have zero fees |
Possible closing costs and fees |
May be limitations on future contributions and possible loss of investment growth opportunities |
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Loan in parent name only; loan cannot be transferred to student |
Loan in student name, but will most likely need a co-signer who is equally liable to repay the loan.Loan can also be in the parents name "only".
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Loan in parent/owner’s name only, and dependent upon equity in home. This creates a lien against the borrower’s house and reduces actual home equity. |
Loan in parent/owner’s name only |
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Can request in-school deferment |
Can choose full-deferment loan option |
No deferment option |
Only deferred if called to active duty in the military |
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Interest may be tax deductible |
Interest may be tax deductible |
Interest may be tax deductible |
May incur tax penalties |
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Federal insurance covers loan if parent OR student dies |
Some lenders will dismiss a loan if the student dies |
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Suggest contacting your vendor and a tax professional before proceeding |
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The choice is yours! We hope this information will help you make an informed decision.