Any reason to complete FAFSA?

Lowcarb
Thu, 02 Feb 2012 15:28:54 +0000

I hear you socaldad1 on the 8%. Interesting that you can one can get a HELOC in teh 3% to 4% range and that loan can be discharged in a bankrupcy. Stafford loans can’t be discharged, you child is on the hook for life. So why the higher rate?

Think of this hypothetical situation. Homeowner established a Home Equity Line of Credit several years ago (when they had some equity). Now after the real estate crash they are underwater on their loan, but the HELOC is still in force. They max out the HELOC, use the $ to pay junior’s tuition. Then they lose their job and wind up filing bankruptcy.

vs. Same set of circumstances but they took out PLUS loans, paid a higher rate and are on the hook for life (in addition to having to live with the problems that come from filing bankruptcy).

Just saying, given the power of the government to come after you for life these loans should be considered more secure than even a collateral secured loan.

I think the current rates are 6.8% for Stafford and 7.9% for PLUS