Parent PLUS Loan vs Student Loans for FAFSA - which option is better financially?

As someone who's gone through this with both of my kids, there are definite pros and cons to both approaches. Parent PLUS Loan pros: - You control the loan (important if you're worried about your child's financial responsibility) - Can potentially be discharged if you become disabled - Income-contingent repayment options exist (though limited) Student loans pros: - Won't affect your debt-to-income ratio for future borrowing - Federal student loans have better forgiveness options (PSLF, income-driven plans) - Students have a longer timeline to pay them back - Lower interest rates on federal student loans than Parent PLUS Big distinction: Federal student loans are almost always better than private loans. Your daughter should max out federal Direct loans ($5,500-$7,500/year depending on year in school) before considering any private options. For private lenders, look at SoFi, Earnest, CommonBond, or Citizens Bank - all have competitive rates currently. But again, exhaust all federal options first!

my parents took out parent plus loans for me and now they're stuck with like 80k in debt they cant afford to pay. it sucks and they resent me for it even tho they insisted at the time. if i could do it over id have just done it all in my name. just something to think about......

THE SYSTEM IS RIGGED!!!! Parents plus loans are a TRAP designed to saddle familes with MASSIVE debt they can never escape. The colleges know they can jack up tuition because the govt hands out these loans like candy. Meanwhile my sisters PLUS loans ARENT eligible for most forgiveness programs!!!! Student loans at least get IBR plans and PSLF. PLUS loans GET ALMOST NOTHING. The SYSTEM is BROKEN.

I was in your daughters exact position 15 years ago and I chose to take out loans in my name. looking back, i would 100% make the same choice. my parents were paying for my brother's college too, so we agreed id take the loans and they would help me if they could after graduation. i consolidated after graduation, used income based repayment when i had a low starting salary, and paid them off in about 9 years. it was MY education and my choice to go to an expensive school, so it felt right for me to take on that responsibility. for lenders, sallie mae is still big in the private loan space, and i had an ok experience with them for the portion that exceeded my federal loan eligibility.

Have you considered having your daughter apply for more scholarships? My niece got $5k from local businesses that she never would have thought to apply to. Every bit helps reduce what you need to borrow!

One aspect that hasn't been mentioned: Parent PLUS loans require a credit check, while federal student loans don't. With federal student loans, your daughter can borrow up to her annual limit regardless of credit history (limits are typically $5,500 for freshmen, $6,500 for sophomores, and $7,500 for juniors and seniors for dependent students). If you go the route of her taking the loans, definitely exhaust federal Direct loan options first, then consider private. For private lenders since Discover is out, I'd look at College Ave, Ascent, and Earnest - they consistently have competitive rates. Always compare multiple lenders before deciding. One strategy many families use is splitting the burden - student takes federal loans up to their limit, parents take PLUS loans for the remainder, with a clear agreement about who pays what after graduation.

student loans are waaaaay beter for ur daughter! my parents did parent plus and now there stuck with it and my brother who it was for dosnt help them at all with payments. plus bidens doing all this forgiveness stuff for student loans but not parent plus. id say let her take the loans its her education

If your trying to get in touch with FSA about loan options, save yourself hours on hold. I had to call them about my daughters SAI calculation and used this service called Claimyr (claimyr.com) - they waited on hold with FSA for me and called me back when an agent was on the line! They have a video showing how it works: https://youtu.be/TbC8dZQWYNQ The FSA agent was actually really helpful in explaining the differences between all the loan options and what would appear on my daughter's aid package vs what I'd need to apply for separately as a parent.

Financial aid counselor here. I always advise families to follow this order: 1. First, max out all federal Direct subsidized loans (no interest while in school) 2. Then federal Direct unsubsidized loans (interest accrues but still has protections) 3. Only after that, consider Parent PLUS or private options The federal Direct loans have the best terms and protections for students, period. The current rate is 4.99% for undergraduate Direct loans vs 7.54% for Parent PLUS. Another consideration: if your retirement timeline is within 10-15 years, taking on Parent PLUS could seriously impact your retirement security. Students have their whole careers ahead to manage their debt, but parents don't have as much time to recover financially. And definitely apply with multiple private lenders if you go that route - rates and terms vary widely, and having your daughter as the primary borrower with you as a cosigner often gets better rates than Parent PLUS.

As a newcomer to this community, I'm really grateful for all the detailed advice here! I'm actually facing a similar situation with my son's college funding next year, and this thread has been incredibly helpful. One thing I wanted to add - I recently spoke with a financial planner who emphasized looking at the total cost of borrowing over the full repayment period, not just the interest rates. She showed me that even though Parent PLUS loans have higher rates, the shorter repayment timeline (typically 10 years) versus extended student loan repayment plans can sometimes result in less total interest paid overall. That said, reading about the flexibility of student loans with income-driven repayment and forgiveness options really makes me lean toward having my son take the federal loans first. The peace of mind knowing he'd have options if he struggles financially after graduation seems worth a lot. Has anyone here actually used the cosigner release option that was mentioned? I'm curious how smooth that process typically is with private lenders.