Graduate PLUS Loan

Alternative Loan

Interest Rate

• Fixed interest rate of 8.5% as of July 1, 2006.

• Variable interest rate determined monthly or quarterly based on Prime or LIBOR rate plus a margin.

• May be as high as 18-21% and is not capped.

Fees

• A 4% Federal Origination Fee/Federal Default Fee may be deducted from the loan proceeds prior to disbursements.

• Fees vary among lenders, and may go up to 9%.

• Often, fees will be determinined in part by measure of creditworthiness.

Credit Requirements

• Credit check is based upon Federal Standards.

• PLUS Loans are not dependent on family income or assets, no debt-to-income ratios or credit scoring, and no collateral or cosigner is required.

• Borrower must, however, meet certain credit criteria.

• Terms vary by lender, most of whom use credit scores or debt-to-income ratios to determine creditworthiness, interest rates and fees.

• International students usually borrow with a creditworthy U.S. cosigner.

Loan Limits

• Students can borrow up to the cost of attendance less other aid.

• Student [typically with cosigner] may borrow up to the cost of attendance less other aid.

• Limits depend on maximums established by lenders, as well as borrower & co-borrower credit scores.

Interest Accrual

• Accrued interest capitalizes once at final repayment.

• Accrued interest may be capitalized monthly, quarterly or once at repayment.

Cancellation

• Graduate PLUS Loans are federally insured and can be discharged upon death or total and permanent disability.

• Alternative loans are not insured against death or disability.

• Insurance may be available at an extra cost to borrowers.

Repayment Terms

• Repayment typically begins within 60 days after full disbursement of the loan, but can be deferred while the student is enrolled at least half-time.

• Repayment term is 10 years, and there are no prepayment penalties.

• Graduated repayment or extended terms may be available if borrower qualifies.

• Repayment varies by lender and may begin immediately or be deferred until six months after student ceases half-time enrollment.

• Students may select from several repayment plans, and most lenders allow prepayment and early payoff without penalty.

Deferment or Forbearance

• Automatic in-school deferment.

• Wide selection of deferment privleges available.

• Deferment options vary widely and are generally less flexible than Graduate PLUS Loan deferments.

Consolidation

• Ability to easily consolidate Graduate PLUS Loans.

• Graduate PLUS Loans may be consolidated at a fixed rate with other FFELP Loans.

• Many alternative lenders offer consolidation options, but interest rates are variable and scaled to credit.