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Choosing an Education Loan

Choosing an Education Loan

The cost of an education loan is usually the most important criterion.

Mark Kantrowitz

April 21, 2009

Who is Responsible for Repaying the Loan

Usually either the student or the parent is responsible for repaying the loan. The Stafford loan is a student loan, while the Parent PLUS loan is a parent loan.

Private student loans are usually student loans, but since students may not have good enough credit to qualify for the loan, a cosigner may be required. A cosigner is a coborrower and is equally responsible for repaying the loan. If the student borrower is delinquent or defaults on a cosigned loan, the lender may seek repayment from the cosigner. The repayment history (including any late payments) on a cosigned loan is reported on the credit history of both the borrower and cosigner and will affect both their credit scores.

Putting it All Together

The following is a list of the most common loans used to pay for college in order from best to worst:

  • Perkins Loan
  • Subsidized Stafford Loan
  • Unsubsidized Stafford Loan
  • PLUS Loan
  • Home Equity Loan
  • Private Student Loans
  • Credit Cards

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