Federal Direct PLUS Loan vs Private Loan
The Federal Direct PLUS Loan is offered by the Department of Education to parents of undergraduate students and to graduate/professional students. A Direct PLUS Loan is commonly referred to as a parent PLUS loan when made to a parent and as a grad PLUS loan when made to a graduate student. (Undergraduate students are not eligible to borrow the PLUS loan.)
Private loans are offered by private organizations such banks, credit unions, and state-based or state-affiliated organizations. Private loan options are available for both student and parent borrowers. Students typically will need a cosigner to borrow a private student loan.
The table below highlights some of the differences between the two loan programs. Feel free to contact the Office of Student Financial Services for additional information.
| Federal Direct PLUS Loan | Private Loan | |
|---|---|---|
| Interest Rate | Fixed at 8.94% for loans first disbursed on or after July 1, 2025 and before July 1, 2026. | Variable or fixed rate. The rate is provided after an application has been submitted. |
| Fees | 4.228% for loans disbursed on or after 10/1/2020. | Typically zero fees. Check with lender. |
| Loan Limits | Effective July 1, 2026, parents of new dependent undergraduate students may borrow $20,000 per year per dependent student with a $65,000 aggregate limit per dependent student.* | Amount is determined by lender; maximum is up to cost of attendance minus financial aid awarded. |
| Application Process | Apply each year at StudentAid.gov. (Application available in April.) New borrowers also must complete a PLUS Master Promissory Note (MPN). | Apply each year through lender's website. Xavier uses FastChoice to provide a lender list online. |
| Credit Requirement | Must not have an adverse credit history. | Applicants and/or cosigners must meet minimum income and debt-to-income ratio requirements. |
| Repayment | Repayment begins 60 days after the loan has been fully disbursed. Repayment may be postponed until after student graduates. | Typical repayment begins after student graduates unless other option chosen. |
| Additional Requirement | Student must have a valid FAFSA form on file. | None unless notified by lender. |
*Legacy Provision: If a student or parent borrower has a Federal Direct Loan made before July 1, 2026, while the student is enrolled in a program of study, the parent can continue to borrow up to the student's cost of attendance (minus other financial assistance) for three academic years or the remainder of the dependent student’s expected time to credential, whichever is less.