PLUS Loan vs. Private Loan

 

Federal PLUS Loan Program

Private Loan Programs

Borrower

  • Parent PLUS Loan: Parent
  • Graduate PLUS Loan: Student
Student

Fixed Interest Rate

7.41% (2014/2015) As low as 3.75% (varies by lender)

Variable Interest Rate

N/A As low as 2.25% (varies by lender)

Origination Fee

  • 4.288% (12/1/13-09/30/14)
  • 4.292% (10/1/14-09/30/15)
Usually 0% (check with lender)

Credit Requirements

  • Credit check required
  • Approval determined by federal criteria, not credit score
  • No adverse credit & no excessive debt
  • Credit check required
  • Approval determined by lender criteria
  • Credit score & credit history important
  • Cosigner with good credit recommended (cosigner is only responsible if borrower (student) fails to make payments. Only the borrower’s credit history will be impacted, not the cosigner’s.

Enrollment Requirements

At least half-time (6 units) At least half-time (6 units) – except Wells Fargo Collegiate Loan & Sallie Mae Smart Option Loan, which accept less than half-time (3 units).

Eligibility

U.S. Citizen or permanent Resident U.S. Citizen or permanent resident OR must apply with a creditworthy U.S. Citizen or permanent resident cosigner

Pay for Past due Balance

No Charter One TruFit Student Loan (180 days) and Sallie Mae Smart Option Loan (365 days) – if recently graduated or plan on enrolling at Vanguard again

Annual Loan Limit

Cost of Attendance minus financial aid Cost of Attendance minus financial aid

Aggregate Loan Limit

None Varies by lender

Grace Period

No federal grace period; in some cases possible to request deferment while student is in school Varies by lender. Determined by how application is originally completed.

Deferment

PLUS offers unemployment and economic hardship deferments.  No deferment during unemployment or economic hardships

Repayment Terms

  • Standard
  • Graduated
  • Income-based
  • Pay as You Earn
  • Income Contingent
 Determined by lender; Varies by lender; Chosen during application process and cannot be changed after application is completed. 

Master Promissory Notes (MPN)

  • Regular approval: MPN is good for 10 years
  • Endorsed loan: new MPN need for each application
 New MPN required for each application. Part of application process with lender.

Consolidation

Consolidate with other federal PLUS loans (Direct Loans & FFEL) Cannot be consolidated with federal loans. Some lenders offer consolidation (Undergraduate: Wells Fargo, Charter One TruFit Loan; Graduate: CU Student Loans)

Borrower Benefits

 0.25% interest rate reduction for electronic debit account repayment (ACH)
  •  Benefits offered to reduce interest rates and overall loan costs (usually include 0.25% reduction for use of ACH, check with lender)
  • Cosigner release options – varies by lender

Loan Discharge

PLUS Loans are federally insured and are discharged in the even of total and permanent disability or death. Most lenders offer the ability to discharge a loan in the event of total and permanent disability or death. Check with lender.

Tax Incentives

Yes; 1098E given if interest paid is over required amount. Check with tax advisor to determine eligibility for benefit.  Varies by lender. Contact lender to determine eligibility to receive 1098E. Contact tax advisor to determine eligibility for tax benefit.