Compare PLUS and Alternative Loans

Graduate students and parents of undergraduate dependent students may request a Direct PLUS Loan. There are many things to consider prior to applying for a PLUS Loan. Please review the information below and the resources that follow to assist you in making an informed decision.

Important facts about Direct PLUS and Alternative Loans

Interest rate

Alternative (private) Loans

Interest rate may be fixed or variable; variable rates may go up or down depending on the marketplace.

Your interest rate is dependent on your credit history. The lower your credit score, the higher your interest rate. If you have poor credit, you may need a creditworthy co-signer.

Direct PLUS Loans

7.21% fixed (effective for loan disbursements on or after 07/01/2014 through 07/01/2015).

PLUS loans require a credit check for adverse credit history. Denied borrowers may appeal or obtain an endorser (co-signer) to qualify.

Origination fees

Alternative (private) Loans

Check with your lender.

Direct PLUS Loans

4.292% (effective for loans disbursing on or after 10/01/14 and before 10/01/15).

Counseling requirement

Alternative (private) Loans

Check with your lender.

Direct PLUS Loans

PLUS borrowers denied but subsequently approved through an appeal or obtaining an endorser must complete PLUS entrance counseling.

Repayment options while student is in school

Alternative (private) Loans

Deferring repayment options are determined by the lender. You may be able to make interest only payments, or postpone payment until you are no longer enrolled. You will also want to ask if the lender provides a grace period prior to entering repayment.

Direct PLUS Loans

Repayment begins 60 days after the loan is fully disbursed. There is no grace period.

Parent PLUS borrowers may defer repayment while the dependent student is enrolled at least half-time and for an additional six months after the student ceases to be enrolled at least half-time.

Graduate PLUS borrowers enrolled at least half-time are eligible for in-school deferment and a six month grace period prior to repayment.

Responsibility to pay

Alternative (private) Loans

Deferring repayment options are determined by the lender. You may be able to make interest-only payments, or postpone payment until you are no longer enrolled. You will also want to ask if the lender provides a grace period prior to entering repayment.

Direct PLUS Loans

Repayment begins 60 days after the loan is fully disbursed. There is no grace period.

Parent PLUS borrowers may defer repayment while the dependent student is enrolled at least half-time and for an additional six months after the student ceases to be enrolled at least half-time.

Graduate PLUS borrowers enrolled at least half-time are eligible for in-school deferment and a six month grace period prior to repayment.

Co-signer

Alternative (private) Loans

A creditworthy co-signer may help a student qualify for the loan and potentially get a lower interest rate. Co-signers are responsible for the loan if the student doesn’t make payments as scheduled. Review the lender criteria if a co-signer release option is provided.

Direct PLUS Loans

A denied PLUS borrower may pursue an endorser (co-signer) to qualify. The endorser must be approved with a credit check for adverse credit history. There is no endorser (co-signer) release option. PLUS loans approved with an endorser are limited to the amount stipulated by the endorser and limit the PLUS MPN to a single year note.

Enrollment status eligibility

Alternative (private) Loans

Check with lender for enrollment status eligibility. 

Direct PLUS Loans

Half-time or greater.

Standard repayment 

Alternative (private) Loans

Varies with the lender.

Direct PLUS Loans

10 years.

Options during repayment

Alternative (private) Loans

Check with lender for options to postpone or reduce payments.

Direct PLUS Loans

Multiple repayment plans are available.

Deferment and forbearance options to postpone payments are available.

Eligibility for federal consolidation loan

Alternative (private) Loans

No

Direct PLUS Loans

Yes

Cancellation due to death or disability

Alternative (private) Loans

Check with lender regarding cancellation provisions.

Direct PLUS Loans

Yes. The information is available here.

Loan servicer information

Alternative (private) Loans

Check with lender for loan servicer information.

Direct PLUS Loans

Loan Servicer information provided in the National Student Loan Data System (NSLDS).