Loan Comparison
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 7.60%. |
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 |
Limited consolidation options, must check with your lender |
