In most
cases, the first loan a student
should borrow is the Stafford Loan. The new interest rate for the 2018-19
school year was just announced and it went up to 5.045%. Typically, these are going to be the best
interest rates a student can get, unless their community or school they are
attending has a special loan with better interest rates.
But what I
wanted to focus on today is for those families who still have a balance and
need to borrow more money AFTER the Stafford Loan is taken out.
There are
going to be three options.
One is a PLUS
Loan that is a Federal Loan in just a parent’s name. Parents in good credit standing would be eligible to borrow up to the amount of the Total Cost of Attendance minus any
other financial aid a student would receive. The interest rates on the PLUS Loan for the 2018-19 school year was just
announced also. That interest rate went
up to 7. 595%. There is also an
origination fee of over 4% on whatever amount a parent would borrow on this loan.
The other
two options, would involve Private Loans. One for a family that wants their student to co-sign and one for parents
that want to borrow without their student being obligated on the loan.
In the past,
it was easy to say exhaust all FEDERAL options before taking out any
Private Loans. While this is still true for the STUDENT with
Stafford Loans, it is not true for the
PARENT in dealing with the PLUS Loan.
State-based
private student loan companies throughout the country are offering lower cost
loans. Here in the state of Iowa, Iowa
Student Loan’s (www.iowastudentloan.org) highest fixed-rate APR is lower than the PLUS Loan and has no upfront
origination fees.
Significantly lower interest rates
and no up-front fees will save you thousands of dollars over the life of the
loan.
If you are
shopping around for Private Loans, do be wary of private student loan
advertisements for loan rates “as low as.” The credit qualifications for these low rates are usually very
restrictive and unattainable by most people.
If you need help in determining how much to
borrow or places to look for Private Loans, set up an appointment with ICAN
today by calling 877-272-4692 or scheduling online at www.icansucceed.org/scheduleapt.
Erick - ICAN Ankeny and Des Moines Centers
