Although college is becoming almost a necessity to finding a rewarding career, paying for it remains a struggle for most. With the rising cost of education, borrowing from a bank continues to be the major source of college financing. But what is the best borrowing option?

The following information is designed to help families like yours make the most-informed decision possible.

Popular Borrowing Options
The Federal PLUS Loan is a program guaranteed by the Federal government. Parents of a dependent undergraduate student may borrow up to the cost of education minus any financial aid each year. There is no maximum limit to the amount you can borrow, and the loans are based upon a parent’s creditworthiness, not financial need. The repayment of PLUS loans typically begins 60 days after full disbursement, but payments may be delayed under certain conditions.

Through the PNC Bank Manageable PLUS Program, parents may delay their principal and interest payments while their dependent student is enrolled in school, for up to four academic years.

Graduate students are able to borrow through the Graduate PLUS Loan program. Graduate students applying for these loans will automatically receive an in-school deferment while they are enrolled at least half-time. Once you graduate or drop below half-time status, repayment will begin within 60 days.

Private alternative loans such as the PNC Bank Villanova University Loan are often used for education financing. These low-interest private loans are available to eligible credit-worthy students attending eligible schools. This loan is similar to other student loans in that there are usually no payments required while in school (although interest is accumulating) or until six months after leaving school. These loans often require the student borrower to sign the loan with a co-signer.

A Matter of Interest
Financing and repaying a college education is for the long term. It is important to understand how the rates of both Federal PLUS Loans and private alternative loans have performed in the past. The graph linked below illustrates the typical interest rates for these loan programs over the last ten years, since most programs have a ten-year repayment term. Depending upon the rate, amount borrowed and repayment term, the amount of interest paid could equal almost 33% of your original loan balance. View a graph comparing Federal PLUS and private loan rates.

		Alternative Loan Tip Most lenders commonly add margins to common indices such as the LIBOR and prime rate when calculating an alternative loan interest rate.