Compare the Parent PLUS and Alternative Loans
Many students and families need to borrow educational loans to finance their education. The decision becomes whether to borrow a Direct Parent PLUS Loan or a private alternative loan.
Keep in mind that whether a parent is a borrower on a Direct Parent PLUS Loan or a cosigner on a private alternative loan, the parent is equally liable for repayment of either loan.
|Parent PLUS Loan Terms & Conditions||Alternative Loan Terms & Conditions|
Fixed interest rate of 7.21 percent (as of 7/1/14)
Fixed interest rate of 6.84 percent (as of 7/1/15)
Monthly or quarterly fixed interest rates may range from 5.75 percent to 14 percent*
Monthly or quarterly variable interest rates may range from 2.24 percent to 12 percent*
*Fees and interest rates vary depending on the borrower's credit rating
|Offer delayed repayment option
||Payments may be deferred while student is enrolled at least half-time|
|Parent may borrow up to the minus other financial aid||Student (typically with a co-borrower) may borrow up to the cost of attendance minus other financial aid|
|Requires credit check based on federal standards — no debt-to-income ratios or credit-scoring, but does take whether the borrower has an adverse credit history into consideration
Parent may have a better chance of being approved as a borrower on a Direct Parent PLUS Loan than as a co-borrower on a private alternative loan
|Requires comprehensive credit review process|