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Paying for College – Comparison of Some Options

Parent PLUS Loans

Alternative/Private Loans

Home Equity Loan or

Line of Credit

Retirement Accounts

**Government interest rates are set each year. Please contact the financial aid office for the current rate @ finaid@messiah.edu

Fixed or variable interest rates

Fixed or variable interest rates

May be eligible to take a loan or withdraw from 401(k) or 403(b)

**Government interest rates are set each year. Please contact the financial aid office for the current rate @ finaid@messiah.edu

Most loans have zero fees

Possible closing costs and fees

May be limitations on future contributions and possible loss of investment growth opportunities

Loan in parent name only; loan cannot be transferred to student

Loan in student name, but will most likely need a co-signer who is equally liable to repay the loan.Loan can also be in the parents name "only".

Loan in parent/owner’s name only, and dependent upon equity in home. This creates a lien against the borrower’s house and reduces actual home equity.

Loan in parent/owner’s name only

Can request in-school deferment

Can choose full-deferment loan option

No deferment option

Only deferred if called to active duty in the military

Interest may be tax deductible

Interest may be tax deductible

Interest may be tax deductible

May incur tax penalties

Federal insurance covers loan if parent OR student dies

Some lenders will dismiss a loan if the student dies

Suggest contacting your vendor and a tax professional before proceeding