Ask yourself this: Are we as efficient with our money as we can be? Can we cut back on spending in other areas and put it towards college? If the answer is no, then here are some simple rules to follow.
To begin with, make sure you have a plan to pay off the debt efficiently and in a reasonable amount of time. As a general rule, parents shouldn't borrow more than they can repay in 10 years or before they retire. Whichever comes first. Because of costlier terms and looser borrowing limits, there's the danger to take on far more debt that one can really afford.
Families should borrow the maximum they can in federal direct student loans, which have better rates. For families with equity in their home, the cheaper option would be a Home Equity line of credit which has lower interest rates and the interest paid is tax deductible. With Plus Loans, parents can borrow up to the cost of attendance, minus other aid. With these types of loans, interest starts accruing as soon as you take out the loan. Plus Loans typically come with an "origination" fee of about 4% of the principal you borrow. However, compared to undergraduate loans, there's less flexibility on repayment plans. Other good options are Education Loans offered by the state or companies. Like Plus Loans, these education loans typically allow you to borrow up to the cost of attendance, minus other aid. Parents can borrow on their own or co-sign with a child. Credit checks are stricter than Plus Loans, but you may get lower rates and low- or no-origination fees.
Lastly, don' forget to not just take into consideration your child's education, but your own financial situation. Always factor in how a loan payment will affect your ability to fund your retirement. You can borrow for college; you really can't borrow for retirement.