Comparing Grad PLUS and Private Loans

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Determining which graduate student loan will be the best use of your money now and in the future is an important exercise to do before you sign on the dotted line of any loan. What follows is a sample comparison of loan options and their estimated costs - be sure you do your own, tailored to your own needs and financial circumstances.

In the two examples below, we look at two scenarios and how much your monthly payment, interest rate, and total interest paid is affected with different loan scenarios.

Best Case Scenario Comparison

Assumptions:

  • Borrowing $20,000 total.
  • Federal student loan term of 10 years
  • Private student loan term of 20 years
  • Prime and 1 month LIBOR using most recent published rates
  • Borrower has best possible credit
  Monthly Payment Effective Rate Total Interest Paid
Stafford Loan $230.16 4.66% $7,619.31
PLUS Loan $241.60 7.21% $8,990.36
Private Loan 1 $125.88 LIBOR + 4%: 4.44% $10,212.38
Private Loan 2 $108.43 Prime - 0.5%: 2.75% $6,024.24

Poor Credit Scenario

Assumptions:

  • Borrowing $20,000 total.
  • Federal student loan term of 10 years
  • Private student loan term of 20 years
  • Prime and 1 month LIBOR using most recent published rates
  • Borrower has worst possible credit while still qualifying for loan
  Monthly Payment Effective Rate Total Interest Paid
Stafford Loan $230.16 4.66% $7,619.31
PLUS Loan $241.60 7.21% $8,990.36
Private Loan 1 $255.12 LIBOR + 14%: 14.44% $41,229.81
Private Loan 2 $223.01 Prime + 8.95%: 12.2% $33,524.68

Graduate PLUS Loan FAQs

How much can I borrow with a GradPLUS loan?

How are graduate PLUS loan funds disbursed?

What are graduate PLUS loan credit requirements?

Do I need a co-signer?

Can I use a graduate PLUS loan for my Online degree?

Can I cancel the loan if I change my mind, even if I have signed the promissory note agreeing to the loan's terms?

What's the interest rate on GradPLUS Loans?

Get your questions answered by our experts at the Grad Loans Forum.

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