What are private PLUS loans? Private PLUS loans are loans meant specifically for graduate students and undergraduate students who are looking for financial aid to further their education. Like other federal education loans, Private PLUS loans cover basic student costs like tuition, room and boarding costs, and other expenses not covered by other resources. Students like these loans because they have low interest and are federally guaranteed by the United States government.

Additionally, private PLUS loans have the benefit of a fixed interest rate locked in at 8.5%. Other advantages of private PLUS loans include an optional co-signer clause. This is significant because other loan programs may require a co-signer in some circumstances. Interest will be charged on the loan from the date of the first disbursement and until the loan is paid in full. What is the major difference between private PLUS loans and other federal loans like Perkins or Stafford loans? Private PLUS loans are not based according to needs. Therefore, they are easier to qualify for and mostly based upon an individual's credit history. The lending company you work with will send the funds to the participating school of your choice. Also, private PLUS loans do not guarantee deferred payment until graduation. They usually start as soon as disbursement is sent, though grace periods may be generous depending on the lender you work with.

What kind of credit do you need in order to qualify? You must have a clean credit record, free of adverse credit alerts, such as 90 day delinquencies, discharged accounts, home foreclosures, repossessions, tax liens, wage garnishments or educational write offs. What is different is that unlike with many private education lenders, private PLUS loans do not use any kind of a debt-to-income ratio or FICO score when considering credit eligibility.

The biggest advantages of PLUS loans are that they have protections against variable rates, differing terms, and disability/death clauses, that most non-governmental private lenders would use to their advantage. There are also PLUS loans for parents, which help parents to cover the cost of their child's college education. Whether you are already an undergraduate or looking to enroll in a participating college then consider the option of private PLUS loans. Most educators agree this federally sponsored arrangement is much safer than working with a private educational lender. Let the government help you further your education for the betterment of yourself and humanity.