Many students and families need to borrow educational loans to help finance their education. The decision then becomes do I borrow a Federal Parent Plus Loan or a private alternative loan. Listed below is a chart to further evaluate Plus and alternative loan options.
| Facts |
PLUS |
Alternative |
| Borrow up to Cost of Attendance, minus other aid received |
Yes |
Sometimes |
| Interest rates |
Fixed rate at 8.5% |
Variable monthly or quarterly interest rate
Most do not have an interest rate cap |
| Capitalization of unpaid interest |
Once at repayment |
Can be monthly or annually or once at repayment |
| Loan discharge upon death or permanent total disability of borrower |
Yes |
No |
| Generous repayment options with deferments and forbearances |
Yes |
Limited options available |
| Credit check required |
Yes – minimal requirements |
Yes – typically more stringent than PLUS |
| Debt-to-income qualification |
No |
May be required |
| Income verification |
No |
May be required |
| Parent responsible for repayment of loan |
Yes |
Most require parent co signature, impacting the parent’s credit report (similar to PLUS) |
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The Student Loan Network: Stafford Federal Student Loans, Parent PLUS Loans, Student Loan Consolidation, Private Student Loans, Education Loans/College Loans
That is a really nice chart. Helpful information as well.
May 11th, 2007 | #
My wife is an unfortunate victim of “the alternative private loan” and we’re desperate for options. Is there a way to payoff the alternative loan with a PLUS loan and to obtain a fixed rate. I hope someone can assist us in this matter. The article is very informative.
May 14th, 2007 | #
In response to Kern’s question you can not take out a parent plus loan to pay off an alternative loan. At the Student Loan Network we do offer private loan refinancing. For more information on this program please call 866-532-7661. I hope this helps! Good luck!
May 17th, 2007 | #