Private vs. Federal Parent PLUS Loans

Before applying for a private student loan, it’s a good idea to explore your federal student loan options.

Learn about the key differences between private student loans and federal Parent PLUS loans so you can make a confident, informed decision.

Steps to College Funding

Step 1: FREE Money

Scholarships and grants

Step 2: CHEAP Funding

Federal Direct Subsidized & Unsubsidized student loans

Step 3: GAP Funding

Federal Parent PLUS or private student loans

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:

  • Standard Repayment Plan (10 years)
  • Graduated Repayment Plan (10 years)
  • Extended Repayment Plan (Up to 25 years but must meet certain criteria)
  • Additional options may be available under income-driven 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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