Parent Loans or Student Loans what is going to be best for my child?

At least 20% of college students need some type of loan to help pay for their college education. Such a statistic may lead to students graduating with an unmanageable debt load. An alternative is for parents to help out by taking out loans themselves. But which is the better option student loans or parent loans? Each has targeted advantages and uses.

Federal student loans
Federal student loans have the lowest interest rates and best repayment options. If you absolutely need to take out loans and you qualify for federal loans, this is your best choice. Just be sure to accept only the funds you need, even if you are offered much more. Parents can always help their children pay off these loans once repayment begins after graduation.

Federal parent loans
PLUS Loans (Parent Loan for Undergraduate Students) are another loan option that comes with low interest rates. If you are a parent with dependent students attending college at least part-time and you have a grand credit history, you are eligible to receive a PLUS Loan. These loans are not needs-based. You may borrow up to the total cost of undergraduate education expenses, minus other financial aid already received. Unlike federal student loans, payment is not deferred until after graduation; instead, your first loan payment will be due about 60 days after the loan is disbursed. Also unlike federal student loans, PLUS Loans require an application fee.

Private loans
Both students and parents might take out private loans to cover funding gaps. Terms are basically the same for these loans, although students might be able to have their repayment deferred until after graduation. Another consideration is that students can wish to take out small loans to start to establish a credit history. You may absolutely need to cosign for private student loans.

Other options
Parents do have some additional options for college funding, such as home equity loans. These generally have rates as great as private loans.

So which type of loan should I get?
This really comes down to a personal decision. Ask yourself these questions as you are trying to decide:

-What level of debt do you feel is manageable for your child to graduate with?
-How important is it to you that your child takes responsibility for paying student loans?
-Will you and your child work out a repayment plan to repay PLUS Loans and other parent loans?

This article is distributed by NextStudent. At NextStudent, we believe that taking an education is the best investment you can make, and we are dedicated to helping you pursue your education dreams by generating college funding as elegant as possible. We invite you to learn more about Parent Loans or Student Loans at http://www.NextStudent.com .