Comparison of the Federal Direct PLUS Loan and the Alternative Loan

Federal Direct Parent PLUS Loan	Alternative Loan
Loan Terms and Conditions
Fixed interest rate of 7.9%.	Fixed and variable interest rate --monthly or quarterly -- ranges from 2.25% to 13.74%
Delayed repayment options offered (annual application prior to repayment required).	Payments may be deferred while student is enrolled at least half-time.
Parent may borrow up to the cost of attendance less other aid.	Student (typically with a co-signer) may borrow up to the cost of attendance less other aid.
Credit check based on federal standards--no debt-to-income ratios or credit-scoring. A parent may have a better chance of being approved as a borrower on a Direct Parent PLUS Loan than as a co-signer on a private alternative loan.	Borrowers must pass comprehensive credit review process.
Repayment
Parent is responsible for repayment.	Student is responsible for repayment. However, a co-signer is typically required and equally liable.
Accrued interest capitalizes once at final repayment.	Accrued interest may be capitalized monthly, quarterly, or once at repayment.
Federally insured against death and disability for both the parent and student.	Check with the lender as some are now allowing cancellation due to death of a borrower.
Opportunities available to consolidate Parent PLUS Loans--interest rate capped at 8.25%.	Limited consolidation options, must check with your lender