Direct Graduate PLUS vs. private loan criteria
The following chart allows you to compare the eligibility and loan terms of the Graduate PLUS loan with the requirements that are typical of many private educational loans available to students from commercial, for-profit lenders. Private educational loans from commercial lenders are too numerous to catalog here, so this chart uses typical rates, terms, and conditions of private lenders.
| GRADUATE PLUS LOAN | PRIVATE LOAN | |
|---|---|---|
| Borrower | Student is borrower | Student is borrower |
| Credit check | Eligibility based on approval of credit history (no accounts in default, collections status, charge off, write off, or 90-days past due status), not credit score; if credit requirement not met, a credit-worthy endorser is an option for eligibility (an endorser, unlike a co-signer, is not liable for repayment.) | Credit approval based on credit score and history; a credit worthy co-signer, who agrees to be liable for the loan, may be required for best terms or eligibility | Annual maximum | Cost of attendance less financial aid | Generally, cost of attendance less financial aid |
| Aggregate maximum | None | Varies by lender |
| Interest Rate | 7.9% fixed rate | Varies by lender, credit score, and co-signer status |
| Fees | 4% origination fee; a rebate of 1.5% is refunded to the borrower if the first 12 payments are made on time, reducing the actual fee to 2.5% of the loan amount | Varies from 0%-5% for origination and/or repayment fees, according to the lender, student's credit score, and whether the loan is co-signed |
| Deferment and forbearance | In-school deferment and possible 6-month forbearance to align with other Federal Direct subsidized and unsubsidized loans | Generally, not available, but some lenders may offer forbearance |
| Grace period | None | Varies by lender between 6-9 months |
| Repayment terms | Choice between standard, graduated, extended, and income-contingent terms | Varies by lender; sometimes interest-only payments allowed during early years |
| Repayment period | 10-25 years depending on repayment option chosen and amount owed | Varies 10-25 years, according to the lender and amount owed |
| Consolidation | Eligible for Federal Direct Consolidation Loans | None |
| Death/disability | Discharged, if borrower dies or becomes totally, permanently disabled; endorser not liable for debt | Most loans not insured against death or disability |
| Promissory note | Direct loan master promissory note (MPN) covers multiple direct loans up to 10 years | Varies by lender |
