PLUS Loans and Private Student Loans Explained

Where these loans fit in your plan

After grants, scholarships, savings, work-study, and federal student loans, some families still face a funding gap. PLUS loans and private student loans are tools for covering that remaining cost — but because they are typically borrowed on top of other aid, they sit near the bottom of a sensible funding order. A common approach is to use free money and federal student loans first, then consider PLUS or private loans only for what remains. Borrowing less is almost always better than borrowing more, so revisit your cost estimate before adding any new loan.

• Free money first — grants and scholarships
• Then federal student loans (with their borrower protections)
• PLUS or private loans only for a remaining, well-calculated gap

Federal PLUS loans

PLUS loans are federal loans from the US Department of Education. A Direct PLUS Loan for parents (Parent PLUS) lets an eligible parent borrow for a dependent undergraduate's education, while a Grad PLUS Loan lets eligible graduate or professional students borrow for their own education. Both generally involve a credit check and can usually cover up to the school's cost of attendance minus other aid. Eligibility, terms, and any limits are set by the government, so confirm the current rules on studentaid.gov.

• Parent PLUS — borrowed by a parent for a dependent undergraduate
• Grad PLUS — borrowed by a graduate or professional student
• Federal loans, so they carry federal protections and repayment options
• Approval considers credit history; terms are set by the government

Private student loans

Private student loans come from banks, credit unions, and other lenders. Rates, terms, fees, and eligibility are set by each lender, and approval usually depends on credit and often a co-signer. They do not carry federal benefits such as income-driven repayment or federal forgiveness. Because terms vary so much, compare multiple lenders on interest rate type (fixed vs variable), total cost, repayment options, co-signer requirements, and hardship policies before committing. Read the promissory note carefully.

How to weigh PLUS vs private

There is no universally better choice — it depends on credit, who is borrowing, the rates available, and how much flexibility you want. Federal PLUS loans offer federal repayment protections; some private loans may offer different rates or terms for certain borrowers. Compare the full cost and the fine print, not just the advertised rate.

• Compare interest rate type and the total amount repaid over the life of the loan
• Check repayment flexibility, deferment, and hardship options
• Note any fees and whether a co-signer is required
• Confirm current PLUS terms on studentaid.gov; confirm private terms with each lender

Borrow deliberately

Whatever the source, treat borrowing as a decision with long-term consequences. Estimate your likely monthly payment after graduation against realistic earnings, and borrow only what you genuinely need. This is general information, not financial advice — for a personal decision, consult a qualified advisor. Keep copies of all loan documents, know your servicer, and track your total balance across every loan so the full picture stays clear.