Deciding which loan type, private or federal, works best to pay for your children’s education comes down to two main thoughts. The first is interest, ideally you would pick the loan option with the lowest fixed interest rate. The second concern is benefits, if you qualify for and are interested in Public Service Loan Forgiveness (PSLF) you would want to consider a federal student loan.

 Let’s talk through both choices.

A Parent PLUS loan is the federal student loan option you have available as a parent. Parent PLUS loans will remain in your name until they’re repaid. Your twins won’t be able to consolidate this loan with any of their own federal student loans to transfer ownership. You would take out separate parent PLUS loans for each child.

The benefit of a Parent PLUS loan is that you can be eligible for certain federal student loan benefits like income-driven repayment plans and loan forgiveness. However, Parent PLUS interest rates are pretty high (in 2017-2018 interest rates were 7%).

If you’re able to secure a home equity loan or an alternative line of credit for a lower fixed interest rate than the Parent PLUS loans this might be a better choice. The main thing to ensure is that you are able to afford the monthly payments on any private line of credit you obtain. There are no repayment benefits and no forgiveness options for these private lines of credit, which is just fine as long as you can afford payments.

– If your children can get Direct subsidized loans for their undergraduate degree, those typically have a lower interest rate and don’t accrue interest while they’re enrolled in courses.

– It’s important to consider the ability to borrower for any future children. If you borrow for the twins will you be able to borrow for other children in your family?

– Does borrowing for college education impact your ability to manage your own debt (mortgage, credit card, auto, etc)? Does borrowing impact your ability to save for retirement?