Federal PLUS loans or Wells Fargo Private Student Loans

Wells Fargo has introduced new private student loans that are positioned as a suitable way to finance your child’s college education. With this loan you have the option of making interest-only payments for up to 2 years while your child is studying in school. On the graduation of your child, you can take up to 15 to repay this private student loan. There are no fees involved and interest rates can be anywhere between 4.25% and10.74 %; ie; variable, depending on your credit.
Apart from parents, thee student’s guardian, grandparents and uncles can also benefit from Wells Fargo Student Loans. This new product is getting popular especially after President Obama signed a law that would stop private banks from giving federal loans to students. By shifting to a direct lending model, financial institutions and banks are predicted to lose almost $2 billion annually. To bridge the gap and get profit, there are products like private students loan coming up.

The benefits of the private student loan are that the interest rate is cheaper and you can pay the loan conveniently as the loan period is longer. This actually translates into lower monthly payments.

The disadvantage with private student loan is that since the repayment period is long, you will actually pay higher interest over the life of the loan. Also since the interest rate varies, you may see a rise in the interest rates too. It is expected that interest rates will go up in a few years.

But then one does have to feel disillusioned . You can choose another student loan option called Federal PLUS loans. These are loans given to parents of undergraduate students. The interest rate is fixed at 7.9 per cent with a 4 percent fee and the repayment period is 10 years. With Federal PLUS loans, the person gets more flexibility. For example, if you have a job loss and cannot make payments, you can avail of the alternate repayment plan, or you can seek deferment or forbearance on the loan amount. Federal loans are actually lower priced, have better repayment facility and have fixed interest rates.

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Posted by Starwin on 23rd May, 2010

Federal PLUS loans or Wells Fargo Private Student Loans

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