Federal Parent PLUS Loan | Alternative Loan |
Loan Terms and Conditions |
| Fixed interest rate of 8.5% as of July 1, 2006. | Variable interest rate--monthly or quarterly--range from similar to Stafford Loan rates to as high as 18% to 21% |
| For loans disbursed after July 1, 2008, payments may be deferred while student is enrolled at least half-time. | Payments may be deferred while student is enrolled at least half-time. |
| Parent 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 parent may have a better chance of being approved as a borrower on a Parent PLUS Loan than as a co-signer on a private alternative loan. | Borrowers must pass comprehensive credit review process. |
Repayment |
| Parent 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 for both the parent and student. | Not federally insured against death and disability. |
| Opportunities available to consolidate Parent PLUS Loans at a fixed interest rate. | Lender specific. Usually have scaled interest rates based on credit. |
