Tons of families struggle to decide the best loan to finance the undergraduate tuition bill after they have exhausted scholarships, grants, savings, cash from income, and Federal Student Direct Loan. The two most common loans to pay for college costs that fill this gap are the Federal Parent PLUS Loan and the Private Student Loan.
There are some striking differences between the two loans like interest rate structures, fees (or lack of fees), the lender, and the primary borrower. Depending on family’s credit strength, one option may be more affordable than the other - - in other words one loan may have less financing costs over the life of the loan. Educate your family on these two loans that pay for college costs to decide on the best financing option to meet your needs.
Here is a link to the Private Student Loan used in our calculations.
Federal Parent PLUS Loan vs. Private Student Loan Comparison
Looking to compare Federal Parent PLUS Loans to Private Parent Loans? Check out this blog post.
Colleen MacDonald Krumwiede is a financial aid and paying for college expert with over a decade of financial aid experience at Stanford GSB, Caltech, and Pomona College and another decade at educational finance and technology companies servicing higher education. She guides go-to-market strategy and product development at Quatromoney to transform the way families afford college.