How is a PLUS loan different from a Stafford loan?
Both loans are federally guaranteed, but a Federal PLUS Loan is made to the parents of dependent undergraduates, while a Stafford loan is available to both undergraduate and graduate students and is made directly to the student in his or her name. PLUS loans and Stafford loans also differ in rate, maximum loan amount and repayment terms: • Interest rates: The interest rate on a Stafford loan disbursed after July 1, 2006, is a fixed 6.8%, generally among the lowest available student loan rates. The interest rate for a PLUS loan disbursed after July 1, 2006, is a fixed 8.5%, slightly higher than the Stafford loan rate, but still quite low compared to other types of consumer financing. • Repayment: Repayment on Federal PLUS Loans begins within 30–60 days after the final disbursement. Repayment on Federal Stafford Loans can be deferred until after the borrowing student has graduated or dropped below half-time enrollment. • Loan Amounts: PLUS borrowers can take out up to 100% of their child
