Plus Loan vs Private Student Loan


Parent PLUS Loan

 

PLUS Loan For Parents

School Certified Private Student Loan

Whose name is on the loan?

Parent

Student and cosigner

Cosigner requirement

No. If parent has adverse credit history an endorser may be required.

No, but it you're a student with little or no credit history, it may be difficult for you to qualify for a loan without a creditworthy cosigner. Having a cosigner can also help a borrower qualify and obtain a better rate.

Cosigner/parent release option

No. The parent, and any endorser, is making a commitment to repay the loan for the life of the loan.

Yes. Many lenders provide a cosigner release option where the student can apply to release the cosigner after he or she graduates and makes a specified number of on-time payments and meets underwriting requirements.

Interest rate

6.41% for Academic Year 2013-14 loans.

Many lenders offer both variable and fixed rate options. Interest rates range from 2.25% - 12.99% and are typically based on the borrower and cosigner's credit history so those with good credit may qualify for a lower rate.

Origination/disbursement fees

4.204%3

Varies by lender - most offer 0%

Borrower benefits

0.25% percentage point interest rate reduction for automatic debit enrollment.

Most lenders offer a 0.25% percentage point interest rate reduction for automatic debit enrollment. Additional benefits vary by lender (e.g., graduation rewards).

Repayment period

10 - 25 years4

Varies by lender; typically 5-15-year terms are offered.

Minimum loan requirement

$100 per semester

Varies by lender - Range: $500 to $1500 per loan.

Loan limits

Up to 100% of the cost of attendance minus other financial aid received.

Generally, up to 100% of the cost of attendance minus financial aid received. Lenders may impose limits based on various factors, and can have different loan limits for different loan programs.

Credit check required

Yes. Parent and student must not be in default on a federal loan or 90 days or more delinquent on any debt.

Yes. Loan approval and pricing is generally based on creditworthiness.

Minimum enrollment status

At least half time.

Varies by lender. Some offer loans to borrowers who are attending school less than half time.

Application process

Online through the Department of Education.

Online with lender.

Free Application for Federal Student Aid (FAFSA) required

Yes. In addition to the FAFSA, some states/colleges require additional forms or applications for aid.

No. Families are not required to complete the FAFSA unless it is the policy of the school.

Minimum payment amount while the student is enrolled in school

PLUS loan payments can be deferred while the student is in school (interest continues to accrue and is added to the loan’s principal after graduation).

Varies by lender. Many lenders allow private loan payments to be deferred while in school (interest accrues during this time). Many lenders offer options to make interest payments while in school.

Death and disability loan forgiveness

Yes. If the primary borrower or student beneficiary dies, or if the primary borrower becomes permanently and totally disabled, then the payments on the loan will be waived if certain conditions are met.

Varies by lender. Some lenders waive the remaining balance in the event of the primary borrower’s death or permanent and total disability.

Ability to consolidate through the Department of Education

Yes. Parents can consolidate with other federal loans in their name (not the student’s).

No. Cannot be included with federal student loans.

Options for denied loans

If parent applies and is denied, the student is eligible for additional unsubsidized Stafford loans.

Student could re-apply with a cosigner (or with a different cosigner if cosigner was denied), or apply with another private lender.

Repayment plans

PLUS loans are eligible for graduated and extended repayment options, federal consolidation, and some public service loan forgiveness options.

Most lenders have programs available to assist troubled borrowers, but they are discretionary and not part of the loan agreement.

Interest tax deductible

The parent may be able to use the interest paid on the loan for a tax deduction, subject to IRS guidelines.

The student may be able to use the interest paid on the loan for a tax deduction, subject to IRS guidelines. Restrictions apply to loans for less-than-half-time enrollment.

Graduate PLUS Loan

 

PLUS Loan for Graduate Students

School-Certified Private Student Loan

Whose name is on the loan?

Student

Student and cosigner (if applicable)

Cosigner requirement

No. If the student has adverse credit history an endorser may be required.

No, but if you're a student with little or no credit history, it may be difficult for you to qualify for a loan without a creditworthy cosigner. Having a cosigner can also help a borrower qualify and obtain a better rate.

Cosigner release option

No. The student, and any endorser, is making a commitment to repay the loan for the life of the loan.

Yes. Many lenders provide a cosigner release option where the student can apply to release the cosigner after he or she graduates and makes a specified number of on-time payments and meets underwriting requirements.

Interest rate

6.41% for Academic Year 2013-14 loans.

Many lenders offer both variable and fixed rate options. Interest rates range from 2.25% - 12.99% and are typically based on the borrower and cosigner's credit history so those with good credit may qualify for a lower rate.

Origination/disbursement fees

4.204%3

Varies by lender - most offer 0%.

Borrower benefits

0.25% percentage point interest rate reduction for automatic debit enrollment.

Most lenders offer a 0.25% percentage point interest rate reduction for automatic debit enrollment. Additional benefits vary by lender (e.g., graduation rewards).

Repayment period

10 - 25 years4

Varies by lender; typically 5-15-year terms are offered.

Minimum loan requirement

$100 per semester

Varies by lender - Typically, $500 to $1500 per loan.

Loan limits

Up to 100% of the cost of attendance minus other financial aid received.

Generally, up to 100% of the cost of attendance minus financial aid received. Lenders may impose limits based on various factors, and can have different loan limits for different loan programs.

Credit check required

Yes. The student must not be in default on a federal loan or 90 days or more delinquent on any debt.

Yes. Loan approval and pricing is generally based on creditworthiness.

Minimum enrollment status

At least half time.

Varies by lender. Some offer loans to borrowers who are attending school less than half time.

Application process

Online through the Department of Education.

Online with lender.

Free Application for Federal Student Aid (FAFSA) required

Yes. In addition to the FAFSA, some states/colleges require additional forms or applications for aid.

No. Families are not required to complete the FAFSA unless it is the policy of the school.

Minimum payment amount while the student is enrolled in school

PLUS loan payments are deferred during school and for 6 months after graduation (interest continues to accrue and is added to the loan's principal).

Varies by lender. Many lenders allow private loan payments to be deferred while in school (interest accrues during this time). Many lenders offer options to make interest payments while in school.

Death and disability loan foregiveness

Yes. If the primary borrower dies, or becomes permanently and totally disabled, then the loan will be discharged if certain conditions are met.

Varies by lender. Some lenders waive the remaining balance in the event of the primary borrower’s death or permanent and total disability.

Ability to consolidate through the Department of Education

Yes. The student can consolidate with other federal loans in their name.

No. Cannot be included with federal student loans.

Options for denied loans

If denied, the student may re-apply with an endorser (cosigner).

Student could apply with another private lender or re-apply with a cosigner or a different cosigner.

Repayment plans

PLUS loans are eligible for graduated, income-based, income-contingent and extended repayment options, federal consolidation, pay as you earn, and some public service loan forgiveness options.

Most lenders have programs available to assist troubled borrowers, but they are discretionary and not part of the loan agreement.

Interest tax deductible

The student may be able to use the interest paid on the loan for a tax deduction, subject to IRS guidelines.

The student may be able to use the interest paid on the loan for a tax deduction, subject to IRS guidelines. Restrictions apply to loans for less-than-half-time enrollment.