Office of Student Aid : Graduate Students : Loans : Federal Direct Graduate PLUS Loan : Federal Direct Graduate PLUS Loan vs Alternative Loan
Comparing the Federal Direct Graduate PLUS to an Alternative Loan
Many students need to borrow educational loans (in addition to the Federal Direct Stafford Loan) in order to finance their college education. The decision then becomes whether to borrow a Federal Direct Graduate PLUS Loan or a private alternative loan.
Federal Direct Graduate PLUS Loan |
Alternative Loan |
Loan Terms and Conditions |
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| Fixed interest rate of 7.9% as of July 1, 2007. | Variable interest rate--monthly or quarterly--may be as high as 18% to 21% |
| Payments may be deferred while student is enrolled at least half-time. | Payments may be deferred while student is enrolled at least half-time. |
| Graduate students 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 student may have a better chance of being approved for a Graduate PLUS Loan than a private alternative loan. | Borrowers must pass comprehensive credit review process. |
Repayment |
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| Graduate student 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. | Not federally insured against death and disability. |
| Opportunities available to consolidate Graduate PLUS Loans--interest rate capped at 8.25%. | Limited consolidation options. |