Private Loans/Additional Funding
SUNY Cortland has a payment plan that allows you to spread out your semester bill across four monthly installments. Families can use this short-term payment option to pay an affordable amount each month while financing the remainder with a long-term option such as the Federal Parent PLUS loan. Your advisor in the Financial Aid Office can help you calculate a plan that is right for you and your family.
For more information concerning the SUNY Cortland Monthly Payment Plan, contact the Student Accounts Office.
The Federal Direct Stafford Loan Program provides the best and most affordable loan options for paying for a college education. However, if grants, scholarships and federal student loans have not covered the cost of your education and you are looking for additional funds, some lenders provide private educational loans to students, usually with a credit-worthy cosigner, at rates that may be higher than the federal loans. Some tips you may want to consider are:
- Fees can significantly increase the cost of private education loans. These loans may have a fairly low interest rate but high fees could cost more over time than a loan with a higher interest rate and no fees. Typically, 3-4 percentage points in fees equal a 1 percent higher interest rate.
- Interest rates are almost always variable and are generally not capped like the federal loan rates.
- These loans are usually competitive with the Federal Direct PLUS loan. The lower rates associated with these loans often will be available only to borrowers with great credit who also have a credit-worthy cosigner.
- It is not unusual for lenders to promote a lower rate for the in-school and grace period, with higher rates in effect when the loan enters repayment.
- Typically, loan payments on private education loans can be deferred while the student is in school; however, each lender has its own policies and may require interest payments while the student is in school.
For these reasons, we strongly encourage families to speak with their advisor in The Financial Aid Office prior to applying for these loans. We want to make sure that you have all the information you need to make a good decision.
For more information about private education loans and a chart of potential lenders visit http://www.finaid.org/loans/privatestudentloans.phtml
Home Equity Loans or Lines of Credit are popular borrowing options that provide great flexibility and possible tax deductibility for the interest. Unlike education loans, these funds are not restricted to college costs. Many parents prefer to keep all of their educational and non-educational borrowing together in a single loan — and single payment — tied to their home equity. The interest rates on home equity loans are generally comparable to those of a private educational loan — see above. Your local lending institution can provide you with more information.
Many retirement plans allow investors to borrow against their retirement savings. Using such an option to finance your son’s or daughter’s education can be a complicated decision. Many families may also have other investments or savings that could be used to finance college.
If these funds were saved or invested specifically for education, such as in a 529 plan or Coverdell IRA, then you may want to have a discussion with your advisor about how to make the money last for four, or more, years. However, if the funds were saved for retirement, using them or borrowing against them could significantly reduce your income in retirement.
Remember that there can be tax penalties for early withdrawal of retirement funds, while interest on the PLUS loans is often tax deductible. It may be wise to consult with a professional financial planner or tax advisor prior to making the decision to use your retirement savings to pay for your son’s or daughter’s college education.
Many students/parents make Cortland Monthly Payment Plan payments with a credit card because of the convenience, such as paying online and taking advantage of incentive programs. Credit cards also are useful for making purchases at the college bookstore or for covering other educational expenses.
However, credit cards should not be used to finance college expenses over the long term. If you are carrying educational costs on your credit card from month-to-month, there are almost certainly better options. We suggest speaking with your advisor in the Financial Aid Office about using credit cards before your credit card debt becomes a costly problem.