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The primary advantage of PLUS loan is its federally guaranteed low interest rate. Generally, the interest rate on the PLUS Loan is fixed at 8.5%.The loan can also cover all education costs including, tuition, room and board, education supplies.
To be eligible for a PLUS loan, the parent must have a good credit history without adverse credit. An adverse credit history refers to ninety days late on any debt within the past five years. Parent PLUS Loans require no collateral unlike other type of loans, including home equity. The annual limit on PLUS loans is equal to the cost of your attendance subtract other financial aid you get. For instance, if the cost of your education is $7,000 per year and you receive $3,000, your parents can not borrow more than $4,000 per year.
On the other hands, a home equity loan allows you to you equity as collateral. Lenders tend to be generous to give out a large amount of money for home equity borrowers. If the loan is default, your home will be required to be sold. Home equity loan can be used for many purposed like home repairing, business investment, medical bills, debt consolidation, and education. Before you are taking a home equity loan, you should make sure that it is the right deal for you. Remember that you are putting your home in jeopardy.
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