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.
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Plus vs Alternative Loans |
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| 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. |
