Parent PLUS loan or College Access Loan (CAL in Texas) (school, scholarships)

[motherhen220]

Both kids (freshman & Jr.) will have subsidized & unsubsidized loans.

Which would be better for us? I realize the CAL is in the student's name but we would pay on it if it's a better choice & co-sign on it.

We're hoping to only have to borrow for 2 years & by then have enough to be able to pay as they go (one will be graduated by then).

The PLUS & the CAL are both repayable after they graduate (& a 6 month grace period).

Pros & Cons of both?

[Reneeme]

I used to work for a student loan lender. I would suggest comparing interest rates (PLUS is a fixed rate and I assume CAL is variable), repayment rights (PLUS is a federal loan and usually federal loans have more options), and repayment length/estimated monthly payment. Here is one calculator that may help http://www.finaid.org/calculators/loancomp.phtml

Also, does the CAL loan require a co-signer? What does the credit check entail (you can't always find out what private loan credit checks entail, however, but PLUS loans only look for adverse credit where private loans may have more strict criteria and also they may look at debt to income ratio).

Hope this helps. I am a bit rusty and I am also not familiar with the CAL Loan.

[motherhen220]

Thanks, we're not worried about a credit check & yes we'd be the co-signer. The CAL (College Access Loan) has either a 6% fixed or variable. The variable is redone every year but cannot go over 4 points of when you lock it in. They say the rate is 3.97 right now. I believe the PLUS loan is at 8%. It seems that the CAL is the way to go but we want to make sure.
What's the differences between a federal loan (PLUS) and a private loan (CAL)?

[Reneeme]

Hi again,

PLUS Loans have a fixed rate and come with federal benefits such as deferment options, and extended repayment if you borrow over $30,000. Also, PLUS loan credit checks just look for adverse credit.

However, I peaked quicklyy at the CAL information online, and it looked pretty good to me. The fixed rate is 6% which is lower than PLUS, the fees were similar, it looks like it has repayment options, the repayment time was the same if under $30,000 (although if over $30,000, might only go up to 20 years vs. 30 for PLUS), and you said you are not concerned credit wise.

Did you talk to the school? They should be able to give you pro's and con's that are based on your situation. The web site finaid.org has information about comparing loans as well.

[motherhen220]

Thanks for the info. We're leaning towards the CAL.

We want to ask if we can pay the interest while the kids are still in school as it looks like both repayments start after they leave school with a 6 month grace period. Also with the loans being essentially in their name (with us paying it), they might be more inclined to go after scholarships knowing its ultimately their loan (along with their Stafford loans).

Any other info will be welcomed!