Student Loans - Private Loan vs Parent Loan
If you are just joining this blog for the first time,
to bring you up to date, so far we have discussed…
Student Loans - subsidized and unsubsidized loans,
Pell Grants, Federal Supplemental Educational Opportunity
Grants (FSEOG), Credit Reports and Credit History and
Student Loan Debt Consolidation.
The last thing we discussed was the Parent Loan.
We’ll continue with our discussion of loans with Private Loans.
Private Loans are offered to students by the banks without any
collateral. The Private Loan is not secured by the Federal
Government and the banks will charge you a higher interest rate
for this priviledge.
Many banks will ask for a cosigner.
What many people don’t know is that once you cosign to get
a loan for the student, YOUR name goes on the credit report
as having the loan.
You think the student is responsible for the loan, but in reality,
the cosigner AND the student are responsible for the loan.
So if you are going to cosign for a Private Loan as a parent,
you might as well get a Parent Loan.
The advantage of the Parent Loan over a Private Loan
is that it is less interest and you own it.
It’s going to go on your credit report anyway.
And (as a worse case scenario) if the student passes away,
you don’t repay the loan. The loan is negated.
With a Private Loan, you are still responsible for that loan.
TAGS:
cosigning, Parent loans, Private loans