The Great Debate
Although college is almost a prerequisite for a rewarding career, paying for
it remains a struggle for most.
With the rising cost of education,
borrowing from a bank continues
to be the major source of college
financing.
But what
is the best borrowing option for you?
Popular Borrowing Options
- The Federal
Parent Loan for Undergraduate
Students (PLUS) is a loan
program guaranteed by the federal
government. Parents of a dependent
undergraduate student may borrow
up to the cost of education
less any financial aid annually.
There is no maximum limit to
the amount you can borrow and
the loans are based upon a parent’s
creditworthiness, not need. PLUS
Loans typically go into
repayment 60 days after full
disbursement, but payments may
be delayed under certain conditions. Through the PNC
Bank Manageable PLUS Program,
parents may delay their principal
and interest payments while
their dependent student is enrolled
in school, for up to four academic
years.
- Private
alternative loans are
often used for education financing.
These low-interest private loans
are available to eligible credit-worthy
students and co-signers attending
eligible schools. This loan
is similar to other student
loans in that there are usually
no payments required while in
school (although interest is
accumulating) or until six months
after leaving school.
View a chart comparing the rates and terms of Federal PLUS Loans and alternative loans.
Rates: A
Matter of Interest
Financing and
repaying a college
education is for the long-term, so it is important to understand
how the rates of these two types
of loans have performed in the
past. The following graph illustrates
the typical interest rates for
these loan programs over the
last ten years, since most programs
have a ten-year repayment term.
Depending upon the rate,
amount borrowed and repayment
term, the amount of interest
paid could equal almost 33%
of your original loan balance.
Read more about alternative loans versus Federal PLUS Loans.
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