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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 7.21% 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.