Plus Vs Alternative Loans
It is important to note the differences between the Federal Direct Parent PLUS Loan and an alternative loan through a private lender. Differences in eligibility, interest rates, and repayment schedules exist between the Parent PLUS and alternative loans.
Plus vs Alternative Loans
|Borrower is the Parent||Borrower is the student. Student should have a co-signer to secure the loan at the best possible rate.|
|Parent must pass a credit check. Cannot have an adverse credit report or be in default.|| Student cannot have bad credit. All lenders require co-signers.
|Repayment is 60 days after the final disbursement of the academic year or may be deferred until 6 months after the student graduates or ceases||Repayment is 6 months after graduating or non-enrollment.|
| Interest is 7.9% fixed for the life of the loan
||Interest rates can be variable or fixed. Varies from lender to lender.|
|Capped at 9% - Interest cannot go any higher.||No cap on interest.|
|Student must be registered for at least 6 hours and making satisfactory academic progress.|| Some lenders allow students to be enrolled less than 6 hours and be USAP
(unsatisfactory academic progress).
|FAFSA must be on file.||FAFSA is not required, but is recommended, to take advantage of the federal loan programs.|