<p>For anyone or any family that’s used either of these two banks, how have they been dealing with student loans/college loans? For the expected contribution (EC) they list on the financial aid statement, that is usually the amount to take out, correct?</p>
<p>Stafford loans are pretty generalized and they have a fixed rate. And the Stafford loans interest rates decrease over time annually. However, for the EC, would you recommend taking out a student loan or a parent loan?</p>
<p>I know Wells Fargo has an option of “college loans”, more specifically called the Wells Fargo Collegiate Loan. ([Wells</a> Fargo Student Loans -Wells Fargo Collegiate® Loan](<a href=“Wells Fargo Bank | Financial Services & Online Banking”>Wells Fargo Bank | Financial Services & Online Banking)) This loan has a variable rate, but also with several benefits. As opposed to the Parent Plus Loan (<a href=“https://www.wellsfargo.com/student/parent/plus/[/url]”>https://www.wellsfargo.com/student/parent/plus/</a>), where the interest rate is higher among other things.</p>
<p>On the other hand, Bank of America offers the federal loans as well.</p>
<ul>
<li>Any preference over the banks?</li>
<li>Preference over student loans for the EC? aka “college loans”
or parent loans? aka Parent Plus loan vs. private loans</li>
<li>Are there any fees/restrictions in opening a college student account/parent account? (Meaning, opening fee, maintaining a minimum amount in an account, etc)</li>
</ul>
<p>Any thoughts, opinions, comments are welcome! Thanks in advance!</p>
<p>I think you may be confused about terms and types of loans.</p>
<p>The EFC (Expected Family Contribution) is an amount that a formula (either FAFSA or Profile, Federal Methodology or Institutional Methodology) calculates that your family can afford to contribute to one year’s college education. I THINK that’s what you’re referring to when you type EC.</p>
<p>Each school will come up with a different financial aid offer to make up some of the difference between the Cost of Attendance, and the EFC. That aid package may include Stafford or Perkins Loans. Schools may also let you know that you’re eligible for a parental PLUS loan for an amount up to the EFC and the unmet need (if any). You can choose any lender (that offers them) for Stafford or PLUS loans-- but fees vary. We used Discover for our Stafford loans- no fees, and were pleased.</p>
<p>Beyond that, if your family need to borrow further, you can take out a “college loan” or “student loan” from any number of banks, which will likely require credit check and parent co-sign. Terms, rates, and fees vary. Whether you need to do that depends on your financial situation.</p>
<p>Perkins or Subsidized stafford loans are a no brainer-- zero interest while the student is in college (actually, the interest is covered by the govt). Unsub Stafford are next best-- interest accrues, but no repayment required until after college. Parents often skip the PLUS loan in favor of a home equity loan, where the rate might be better.</p>
<p>The EC I was referring is the cost of attendance minus the financial aid offer from the school.</p>
<p>Never thought about the home equity loan aspect of it, could be worth considering.</p>
<p>Do you intend to pay this loan back or make it your child’s responsibility? Some private loans contain a provision to drop the cosigner after x months of on-time payments. However, many private loans are not at a fixed rate, so they could become expensive over time.</p>
<p>Home equity would have an additional tax advantage, if you can deduct the interest paid. But if you intend to use it every year, you could be putting your home in jeapordy.</p>
<p>Parent Plus loans are at a fixed rate and come with some unique provisions - discharge in case of death does not apply to private education or home equity loans and payment can be deferred while the student is in school. I believe Discover has an interest rate bonus on these.</p>
<p>I don’t know how big a loan you’re considering but one possible solution would be to sign up for the tuition payment plan at school for as high of a monthly payment as you know you can afford - small enrollment fee, no interest charged. Finance the balance with a Plus loan/home equity w/interest only payments and use your education tax credit money to pay the second loan down.</p>
<p>Also, if there is even a slight chance that your child will go into teaching, have them apply for a $4K federal Teach grant. If they don’t end up in the education field, it simply converts to an unsubsidized Stafford loan but the grant can’t be applied retroactively.</p>