Other financing options

What if the aid that is offered is not enough to cover the student's costs?

Most families choose one of three options for additional educational funding: a Federal Direct Parent PLUS Loan, a private parent loan or a private student loan from a private lender.

Federal Direct Parent PLUS Loans

• The Federal Direct Parent PLUS Loan Program provides loans for parents of dependent students attending post-secondary schools.
• The Direct PLUS Loan is an education loan, with an interest rate of 8.05% for the 2023-24 academic year, that allows a parent to fund up to the entire cost of their student's education minus financial aid already awarded. In addition, there is a 4.228% origination fee deducted from the loan prior to disbursement.
• Eligibility is based on credit worthiness of the parent. Parents and/or step parents of dependent undergraduate students are eligible to borrow under the Federal Parent PLUS program.
• To apply, go to our Parent PLUS Loan page.

Private student or parent loan from a private lender

• Students who need additional funds for education, beyond what was awarded on their financial aid offer, might consider a private student loan. Parents may consider a private parent loan.
• These loans are private educational loans from a lender and are not guaranteed by the federal government.
• Approval of a private student loan is based on creditworthiness. Most students will require a co-signer.
• The student should file a Free Application for Federal Student Aid (FAFSA) to determine eligibility for federal and state aid before applying for a private student loan.
• To apply, go to our Private student loans page. 

Graduate Students

Graduate Students can apply for either a Federal Direct Graduate PLUS Loan or a Private student loan.

How much can be borrowed for a PLUS Loan or Private student loan?

• The amount listed as "Your Other Loan Eligibility*" on the student's financial aid offer is the maximum amount that can be borrowed.
• Students cannot accept the item "Your Other Loan Eligibility*" on their financial aid offer because it is not an awarded item. It is only an estimate of the amount that can be borrowed in a Parent PLUS Loan, a Graduate PLUS Loan (Graduate students only) or a private student loan.
• A separate application is required for any of these loans.
• Borrowing the maximum amount can often result in the student receiving a financial aid refund after paying the outstanding university charges. For assistance with determining a precise amount to borrow, use our Calculating how much you need to borrow for college handout.
• Tutorial Video: Determining How Much to Borrow

Comparison: Direct Parent PLUS Loan vs. Private student loan

The Federal Direct Parent PLUS Loan is a low-interest education loan that allows a parent to fund the entire cost of their student's education minus financial aid already offered and accepted. Before making a decision whether to apply for a Direct Parent PLUS Loan, apply for a private parent loan, or co-sign a private student loan, please take a moment to consider the differences between the three.

Interest Rate
Parent PLUS Loan: Fixed at 8.05% for the 2023-24 academic year. 

Private parent or student loans: Variable (although some lenders offer the option for a fixed rate), usually no cap. Many programs reset quarterly. Varies from lender to lender. Usually based on a consumer index (prime, commercial paper, LIBOR, etc) plus a margin.

Borrower
Parent PLUS Loan: The parent is the borrower and the loan is in the parent's name.

Private parent loans: The parent is the borrower.

Private student loans: The student is the borrower. While the loan is in the student's name, usually a parent is included as a co-signer. Co-signer bears equal responsibility for loan repayments. Generally, a student might receive a better interest rate with a credit worthy co-signer.

Loan Amounts
Parent PLUS Loan: Up to the cost of the student's education minus other financial aid.

Private parent or student loans: Minimum and maximum borrowing limits vary from lender to lender. Cannot exceed cost of attendance minus other financial aid.

Cancellation
Parent PLUS Loan: Loan forgiven if student or parent dies.

Private parent loans: Usually discharged if borrower dies.

Private student loans: Not usually discharged if student dies. If there is a co-signer, co-signer may continue to be responsible for repayment of the loan.

Interest Accrual
Parent PLUS Loan: Parent may postpone payments until student is out of school six months (must apply with federal loan servicer each year). Interest accrued during the postponed period is capitalized. Parents may also choose to make interest-only payments while student is in school.

Private parent loans: Interest accrues while student is in school. Repayment terms vary by lender.

Private student loans: Interest accrues while student is in school. Some programs require the student to make minimum monthly payments or interest-only payments while in school. If deferred, repayment usually begins 6 months after student graduates or leaves school.

Deferment/Forbearance
Parent PLUS Loan: Parent may defer payment on this loan until the student is out of school six months (must apply with federal loan servicer each year). To apply for this deferment, contact the Department of Education after the loan is disbursed.

Private parent or student loans: Varies from lender to lender. Check with the lender for availability.

Qualifying
Parent PLUS Loan: Based on credit history; debt-to-income is not considered thus making it easier to qualify.

Private parent loans: Varies from lender to lender but often debt-to-income ratio is considered in credit decision.

Private student loans: Varies from lender to lender but often debt-to-income ratio is considered in credit decision. Many lenders will require a credit-worthy co-signer.

Ease of Application
Parent PLUS Loan: Very easy. Parent must complete a Direct Parent PLUS Loan application at studentaid.gov. When applying for their first Direct Parent PLUS Loan, the parent must also complete a Direct Parent PLUS Loan Master Promissory Note (Direct Parent PLUS MPN).

Private parent or student loan: On-line applications are available for most loans. Supporting documentation is generally required (proof of income, co-borrower addendum, etc).

Fees
Parent PLUS Loan: 4.228% Origination Fee for loans disbursed after 10/1/2021.

Private parent or student loan: Fees vary from lender to lender. May include origination and/or repayment fees. Most lenders do not assess fees.

Repayment Terms
Parent PLUS Loan: Repayment begins 45-60 days after loan is fully disbursed although parent can request that the Department of Education delay repayment until after the student is out of school 6 months. Parent must apply for this deferment each year). 10 year repayment period.

Private parent or student loan: Varies among lenders. Typically, 10 - 25 years.