Office of Student Aid : Parents of Students : Parent Newsletter
Parents of Students
Penn State Office of Student Aid Parent Newsletter
April 2007
Educational Loans--Considering the Options
No question about it. Learning about educational loans takes some time and effort. The various types of educational loans--federal and private, subsidized and unsubsidized, and student and parent--can make it a challenge to sort through the available funding options. If you are trying to organize the loan jargon in your mind, the following information will help to clear up the choices.
Federal Stafford Loan
If your student would like to be considered for this type of loan, he or she need only indicate interest in loans on the Free Application for Federal Student Aid (FAFSA). Our office will determine your student's eligibility for subsidized or unsubsidized Stafford loans.
Federal Parent PLUS Loan
The Parent PLUS Loan is a federally guaranteed loan that is available to parents of dependent undergraduate students. We recommend the PLUS Loan as the primary resource for your family to make up the difference between your student's financial aid award and the cost of attendance at Penn State. Although the loan is federally guaranteed, the borrower must pass a credit check to be eligible for funds. You can find information about applying for the Parent PLUS Loan on our Web site.
Private Alternative Student Loans
As tuition costs increase nationally, some students--for whom a PLUS Loan is not an option--may require funding from an alternative lender to help cover educational costs. In fact, your student may have already received marketing materials from alternative lenders. Please review the terms and conditions of these offers very carefully and compare private loan products as you would offers from competing credit card companies or home mortgage lenders. The offers vary widely and a poor choice of product can cost your student a great deal of money.
Our office has worked very hard over the years to find competitive private loan products that we believe will offer good value to our students. We list several options on our Web site, but we encourage you and your student to shop around and compare terms and conditions of private educational loans. Please keep in mind that your student should not apply for this type of loan until 90 days (or fewer) before the start of the semester for which he or she is applying in order to prevent multiple credit checks, which delay the application process.
PLUS vs. Private
Generally speaking, the federally guaranteed loan products offer the most advantageous terms and conditions for educational loan borrowing. To look at a side-by-side comparison of the PLUS and alternative loans, visit our Web site.