PLUS and Private Credit-Based Loan Comparison

Credit-Based Loans in General

Federal PLUS Loans in Particular

Who Is the BorrowerThe borrower is the person legally responsible for repayment of a loan and who has signed the promissory note.?
With some loans the parent borrows on behalf of the student. With other loans the student is the primary borrowerThe borrower is the person legally responsible for repayment of a loan and who has signed the promissory note., usually with a credit-worthy co-borrowerThe person who applies for a loan with and signs a promissory note agreeing to be responsible for repayment if the borrower fails to meet the terms of repayment. This person’s creditworthiness may make the borrower eligible for a lower interest rate, lower fees, and/or other more favorable terms. who may or may not be the parent, depending on program restrictions.
With the Federal Graduate PLUS Loan, an eligible graduate, post-graduate, or professional program student is the borrowerThe borrower is the person legally responsible for repayment of a loan and who has signed the promissory note..
Is this loan available for International Students? Some lenders will not allow international students to borrow, others will, but will often require a credit-worthy US citizen co-borrowerThe person who applies for a loan with and signs a promissory note agreeing to be responsible for repayment if the borrower fails to meet the terms of repayment. This person’s creditworthiness may make the borrower eligible for a lower interest rate, lower fees, and/or other more favorable terms..
No. With the Federal Graduate PLUS Loan, the borrowerThe borrower is the person legally responsible for repayment of a loan and who has signed the promissory note. must be a U.S. citizen or permanent resident.
Interest RatesA loan expense charged a borrower for the use of borrowed money. Interest is calculated as a percentage of the principal of the loan, which includes the original amount borrowed and any capitalized interest. and Fees
Loans may be offered with interest ratesA loan expense charged a borrower for the use of borrowed money. Interest is calculated as a percentage of the principal of the loan, which includes the original amount borrowed and any capitalized interest. that are fixed for the life of the loan or they may be variable. Fixed ratesA fixed rate is an interest rate that does not change and remains the same for the life of the loan. and variable ratesA variable rate is an interest rate that resets periodically, such as monthly, quarterly or annually. Variable rates are often defined as the sum of a variable rate index, such as the LIBOR index or the Prime Lending Rate, and a fixed rate margin. The margins are often determined based on the borrower’s credit score, where credit scores are grouped into a small set of 5 or 6 tiers and each tier is associated with a different interest rate and fees. may be tiered which means that the rate you are offered is determined by the strength of your credit. Most lenders do not charge fees. 
The interest rateA loan expense charged a borrower for the use of borrowed money. Interest is calculated as a percentage of the principal of the loan, which includes the original amount borrowed and any capitalized interest. for loans disbursed after June 30, 2024 and prior to July 1, 2025 is 9.08% fixed for the life of the loan. The net loan amount disbursed is less than the amount borrowed, because of an origination fee (see your disclosure statement for the specific amount) charged by the government.
Credit Criteria
Some lenders evaluate the strength of your credit based on your credit score, others consider your credit history, others use a combination of both, and some include an assessment scale that is at least in part proprietary. In most cases, a credit-worthy co-borrowerThe person who applies for a loan with and signs a promissory note agreeing to be responsible for repayment if the borrower fails to meet the terms of repayment. This person’s creditworthiness may make the borrower eligible for a lower interest rate, lower fees, and/or other more favorable terms. is encouraged.
Must pass PLUS Loan credit check and must not have adverse credit history. Students unable to meet the PLUS Loan credit criteria may be able to borrow with a creditworthy “endorser”. Borrowers with loans approved via appeal or endorser must complete an online counseling session. The endorser cannot be released from the repayment obligation before the loan is repaid in full.
Minimum and Maximum
While the maximum amount a student could borrow in a credit-based educational loan is the annual cost of attendance (as determined by BU) minus any financial aid, including any Federal Direct Loan, some lenders impose minimum and maximum limits that are more restrictive.
Loans are approved from $100 up to the total annual cost of attendance minus any financial aid, including any Federal Direct Student Loan.
Repayment Terms
Repayment terms are set by the lender and may include the length of the repayment term, minimum monthly payment amounts, and whether principalThe principal or loan balance is the amount of money borrowed or remaining unpaid on a loan. Interest is charged as a percentage of the principal. Insurance and origination fees will be deducted from this amount before disbursement. and/or interest payments are due while the student is enrolled. Most lenders have no prepaymentAny amount the borrower pays before it is required to be paid under the terms of the promissory note. penalties.
A 10-year standard monthly repayment of approximately $13.27 per $1,000 borrowed, with a $50 monthly minimum payment. Extended, graduated, and income-based repayment plans are available. PrincipalThe principal or loan balance is the amount of money borrowed or remaining unpaid on a loan. Interest is charged as a percentage of the principal. Insurance and origination fees will be deducted from this amount before disbursement. and interest payments begin 60 days after the loan has been fully disbursed. There is no prepaymentAny amount the borrower pays before it is required to be paid under the terms of the promissory note. penalty with PLUS Loans.
Enrollment Status
Many but not all lenders require that the student be enrolled at least half time and be in a degree program to be approved for the loan. 
Students must be enrolled in a graduate degree program for at least 6 credits each term. Credit must be accepted towards the degree.
DefermentOccurs when a borrower is allowed to postpone repaying the loan. If you have a Federal Direct subsidized loan, the federal government pays the interest charges during the deferment period. If you have an unsubsidized loan, you are responsible for the interest that accrues during the deferment period. You can still postpone paying the interest charges by capitalizing the interest, which increases the size of the loan. Options
Many lenders offer borrowers the option to pay principalThe principal or loan balance is the amount of money borrowed or remaining unpaid on a loan. Interest is charged as a percentage of the principal. Insurance and origination fees will be deducted from this amount before disbursement. and interest while the student is enrolled or to pay interest only or make no payments while enrolled. Deferring repayment may increase the overall cost of borrowing.
PLUS Loan borrowers can defer payments while student is enrolled at least half time. During defermentOccurs when a borrower is allowed to postpone repaying the loan. If you have a Federal Direct subsidized loan, the federal government pays the interest charges during the deferment period. If you have an unsubsidized loan, you are responsible for the interest that accrues during the deferment period. You can still postpone paying the interest charges by capitalizing the interest, which increases the size of the loan. period interest can be paid monthly, quarterly or can be capitalizedUnpaid, accumulated interest that is added to the loan principal. Because the principal increases, so does the total cost of the loan. quarterly.
Can Loan be Sold?
Some lenders retain ownership of the loans they originate while others bundle and sell their loans to a third party. 
The loan will be held by the U.S. Department of Education for the life of the loan.
Other BorrowerThe borrower is the person legally responsible for repayment of a loan and who has signed the promissory note. Benefits
Some private lenders offer benefits such as interest rateA loan expense charged a borrower for the use of borrowed money. Interest is calculated as a percentage of the principal of the loan, which includes the original amount borrowed and any capitalized interest. reductions to borrowers who, for example have a prior customer relationship with the lender, agree to make payments electronically, graduate with good grades. 
Eligible for loan consolidationThe combination of several federal educational loans into one new loan to simplify loan repayment. under Federal Direct ConsolidationThe combination of several federal educational loans into one new loan to simplify loan repayment. Loan Program.
Lender Website and More Information
More detailed information about loan products is available on each lenders website or by contacting the customer service department of the lender.
Here’s the link to get more information about PLUS Loans for graduate/professional students.
How to Apply
Most loans are applied for electronically via the lender’s website.
Here’s the link for graduate/professional students to apply for a 2024/2025 PLUS Loan. Students borrowing a PLUS Loan for the first time at Boston University must also complete Entrance Counseling. First-time PLUS borrowers and those who have borrowed with an endorser in the past must also complete a PLUS Master Promissory Note (MPN).