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Private Student Loans vs Parent PLUS Loans
Federal PLUS loans (Parent Loans for Undergraduate Students) are recommended for dependent undergraduate students as a supplement to Stafford loans. There are some situations, however, in which private student loans may be an alternative choice or a complementary choice to PLUS loans. We compare the different aspects of Federal PLUS loans to Private Student Loans below:
| What to Consider | Private Student Loan | Federal PLUS Loan |
|---|---|---|
| Loan Ownership | Student borrows the loan, and parents may co-sign for the loan* | Parent borrows and assumes the full obligation of the loan |
| Financial Disclosure | Require no FAFSA information from the student or parent | Parents must disclose their financial history for the FAFSA form |
| School Eligibility | Available to students attending Title IV schools, and some additional vocational, technical, and trade colleges | Available to parents of students attending Title IV certified schools only |
| Independent Students | Independent and dependent students may apply for private loans | PLUS Loans are only available for the parents of dependent undergraduate students |
| Repayment Term | 5-15 years | 10-25 years |
| Loan Forgiveness | If the primary borrower or student beneficiary dies or becomes permanently disabled, remaining payments on the loan are waived | If the primary borrower or student beneficiary dies or becomes permanently disabled, remaining payments on the loan are waived if certain conditions are met |
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*After a series of consecutive on-time principal payments, the student may apply to have the cosigning parent released. Then full responsibility for loan repayment will be transferred entirely to the student.
