Private vs. Federal Parent PLUS Loans
Learn more about the different types of student loans.
If you’ve exhausted scholarships, grants, and Direct Federal Loans for college costs and are still faced with funding gaps, you may be considering Parent PLUS or private student loans. Review the guide to understand key differences.
Steps to College Funding
Federal Parent PLUS Loan |
Private or Alternative Loan |
|
|---|---|---|
| FAFSA Required | Yes | Recommended |
| Who is the lender? | U.S. Department of Education | Credit unions, banks, and other finance companies |
| Who can borrow? | Available to eligible parents of undergraduate students | Available to eligible borrowers – criteria varies by lender. |
| Who is the borrower? | The parent is the borrower. | The loan is in the student borrower’s name, though a co-borrower may be needed to meet credit requirements. |
| Credit Check | Yes – Credit score and debt to income ratio are not considered, but borrower cannot have adverse credit history | Yes – Full credit check – credit score, employment, income and established credit considered |
| Interest rate/fees | Fixed interest rate, plus a loan fee added to all PLUS loans. View current rates on the Dept. of Education’s website. | May be fixed or variable depending on the lender. Rates vary based on the lender and your credit profile. |
| Deferral while in school | Full repayment after borrowing; deferment or interest-only payments by request. | Some lenders require payments while attending school; others allow a deferment option. |
| Repayment Terms | Eligible for the following repayment plans:
|
Check with your lender to find out about your repayment options. Private loans often have options for longer repayment terms. For example, your credit union’s Student Choice line of credit has a repayment term of 10 years for fixed rates and 20 or 25 years based on loan balance for variable rates. |
| Loan Forgiveness | You may be eligible to have some portion of your loans forgiven if you work in public service. | Although many private lenders do not offer loan forgiveness programs, some student loans can be forgiven in certain circumstances. |
| Learn More | studentaid.gov | View more information on your lender’s website. |
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