Private loans vs. Direct Unsubsidized vs. Parent PLUS - making sense of FAFSA loan interest rates

You're right to be comparing options carefully. Let me break this down: 1. Direct Unsubsidized Federal Loans (currently ~7.05%) - Pros: Fixed interest rate, income-based repayment options, potential forgiveness programs, no credit check - Cons: Limited annual amounts ($5,500-$12,500 depending on year/dependency status), origination fee (~1.057%) 2. Parent PLUS Loans (currently ~8%) - Pros: Can borrow up to cost of attendance, fixed rate, some federal protections - Cons: Higher interest rate, higher origination fee (~4.228%), legally your PARENTS' debt not yours, requires credit check 3. Private Loans (5-17% depending on credit) - Pros: Potentially lower interest rates with good cosigner, usually no origination fees, may have cosigner release option - Cons: Variable rates possible, fewer repayment options if financial hardship, no federal forgiveness options Private loans won't directly affect FAFSA eligibility for future years. The elmselect tool is good for comparing private options specific to your school. Always max out federal Direct loans before considering others.

we went thru this last year. ended up doin a mix. took all the direct unsub loans first (obviusly), then did private for the rest cuz the rates were wayyy better than parent plus. got 5.8% fixed with discover. they'll let my son apply for cosigner release after 12 months of on-time payments. just make sure u read all the fine print!!! some private lenders are super shady with the variable rates

Private loans can be tempting with their lower advertised rates, but be careful. Many have variable rates that can increase significantly over the life of the loan. Federal loans have important protections like income-driven repayment plans, deferment options, and potential loan forgiveness programs that private loans don't offer. Make sure you're looking at the total cost of the loan over time, not just the initial interest rate. That origination fee on federal loans is a one-time charge, while an interest rate difference compounds over many years. Also, don't forget to appeal your financial aid if your family's financial situation has changed since the tax years used for your FAFSA.

Has anyone actually CALLED the financial aid office to discuss options? I tried for THREE DAYS and kept getting transferred or disconnected. SO FRUSTRATING!!! The website says they offer individual counseling but it's impossible to reach an actual human who can help. How are we supposed to make informed decisions if we can't even get questions answered? The whole system is designed to keep us confused.

Update: I called my financial aid office and FINALLY got through to someone helpful. For anyone who finds this post later: 1. I'm going with Direct Unsubsidized loans first ($7,500 for my year) 2. Taking a smaller private loan ($10,000) with a fixed 6.2% rate and cosigner release after 24 months 3. My parents are covering the remaining $6,000 from savings instead of Parent PLUS The financial aid counselor also suggested I apply for additional scholarships for next year to reduce the loan amount. Apparently many students don't realize there are scholarships available for continuing students, not just incoming freshmen. Thanks everyone for your help! This whole financial aid process is way more complicated than it needs to be.

One thing nobody's mentioned - if you're considering private loans, check if they offer hardship forbearance options. Federal loans have better protections, but some private lenders will let you pause payments temporarily if you lose your job or have medical issues. Sallie Mae and Discover both offer this, but some smaller lenders don't. Also, compare the total loan cost calculators that most lenders provide - a slightly higher interest rate but shorter repayment term might actually save money over time. Interest rates matter, but term length is equally important when calculating total cost.

quick tip for elmselect - make sure u put in the EXAXT school name. i kept getting no results until i realized i was typing "university of michigan" instead of "university of michigan-ann arbor" lol took me forever to figure that out

As someone who just went through this exact decision process last semester, I wanted to add a few things that might help: 1. **Grace period differences**: Federal loans have a 6-month grace period after graduation before payments start. Some private loans offer this too, but not all - definitely confirm this with any private lender you're considering. 2. **Tax benefits**: Federal loan interest is tax-deductible up to $2,500/year (with income limits). Private loan interest is also deductible, but it's worth noting for your future planning. 3. **Death/disability discharge**: This is morbid but important - federal loans are discharged if you become permanently disabled or pass away. Not all private loans offer this protection, so check the fine print. 4. **Consider community college**: If you're really struggling with costs, taking some gen ed requirements at community college over summer can reduce your total borrowing need. Many CC credits transfer and cost a fraction of university tuition. The mix approach you ended up with sounds really smart - maximizing federal protections while getting better rates where possible. Good luck with everything!