Parent PLUS Loans vs Private Student Loans for FAFSA gap - high interest rate dilemma

I went through this exact situation last year with my son. We ultimately chose Parent PLUS loans despite the higher interest rate, and here's why: the federal protections are significant. PLUS loans offer income-contingent repayment options, potential loan forgiveness programs, deferment/forbearance options, and death/disability discharge that private loans typically don't match. Also, with PLUS loans, you're dealing with one servicer rather than potentially multiple private lenders. Private loans might have lower interest rates if you have excellent credit, but read the fine print carefully - many have variable rates that can increase significantly over time. They also typically lack the flexibility of federal loans if you encounter financial hardship.

went with private loans for my kid. big mistake!!! interest rate started at 5.2% but jumped to 9.7% after 2 yrs. plus they dont care if you lose your job or anything. PLUS wouldve been better

I did a mix of both for my twins. Took out PLUS loans for about 60% of what we needed and private loans for the rest. My strategy was to take the private loans with the absolute lowest fixed rate I could find (ended up at 4.8% with SoFi) and plan to pay those off first. Then I use the PLUS loans for the remainder because of the federal benefits others mentioned. Something else to consider - PLUS loans have that origination fee (about 4.2% I think) that gets taken right off the top. Private loans usually don't have that fee. Just another thing to factor in.

We did Parent Plus loans for my daughter last year and it was super easy to apply for them through studentaid.gov. Just needed my FSA ID and it took maybe 15 minutes? Interest rate is high but honestly idk how much that matters bc I'm never gonna pay off $75k anyways lolol might as well go for the federal benefits

I'm a financial aid counselor (not at a specific school), and I generally recommend PLUS loans for parents who anticipate any potential financial instability in the future. The federal protections are significant. However, if you have excellent credit (740+), stable high income, and plan to pay off the loans quickly, private loans might save you money. One strategy some families use: Take PLUS loans initially, then after graduation, consider refinancing to a private loan IF rates are significantly better. This gives you the federal protections while in school but potentially lower rates during repayment. Also note that PLUS approval is much easier than private loans. PLUS only checks for adverse credit history (defaults, bankruptcies, etc.), while private lenders scrutinize debt-to-income ratio, credit score, and more.

have you talked to your daughters school financial aid office? they should be able to like walk you thru the options better than randos on the internet lol

If you're having trouble getting through to the financial aid office, I recently used a service called Claimyr that helped me connect with actual FSA agents without waiting on hold forever. They can walk you through all the Parent PLUS loan details and compare them to private options. I used them when I had questions about my son's PLUS loans last semester. Their site is claimyr.com and they have a video that shows how it works: https://youtu.be/TbC8dZQWYNQ

whatever u do DONT cosign private loans for ur kid!! my friends daughter dropped out and now shes stuck paying them all herself

Thanks everyone for the great advice! I think I'm leaning toward PLUS loans now, mainly for the federal protections and simplicity. The income-contingent repayment options make me feel better about my variable income. I'll probably apply this weekend. Has anyone had any issues with the credit check part of the PLUS application?