Which Loan is Best for Me: Grad PLUS or Private?
Starting graduate school is very costly but can bring you closer to your dream job. Regardless of which type of loan you choose, you will need to pay back every penny you borrow along with interest and other fees.
To give you a better understanding of how both Grad PLUS Loans and Private Student Loans work, we took the liberty of comparing the two.
Understanding student loans and their implications can be difficult. To the point that you may feel as if you’re reading gibberish. Deciding on which type of loan is best for you is no different. To help you out, we have simplified both loans and their differences into a diagram.
Now that you know what both loans bring to the table, it’s time to know about each of their application processes.
Step by step guide on how to apply for each type of loan:
The application process for Grad PLUS Loans:
- File your FAFSA®: To be eligible for the Grad PLUS Loan, you must file a Free Application for Federal Student Aid (FAFSA®).
- Use a Federal Student Aid ID (FSA ID) to log in: In order to successfully complete the FAFSA form, you must create an FSA ID to electronically sign the application. You will need to use the same ID to login to StudentLoans.gov to apply for the Grad PLUS Loan.
- Loan Information: The application will have a “loan information” section which will ask the following information: School and Loan Information, Reason for Direct PLUS Loan Request, Loan Amount Requested, Loan Period. U.S. Department of Education will utilize this information to get a clear overview of what you’re looking for.
- Borrow information: In this section, you will be asked about your personal information such as home address.
- Terms and Conditions: You must read and agree with the terms and conditions. This will allow the government to check your credit score.
- Credit check results: In this part of the application, you will be informed if your credit score was accepted, declined or pending. If your score was declined or pending, consider getting a cosigner. A cosigner is anyone who has an accepted credit score which could be your parents, spouse, relative, etc.
- Submission: If your application was accepted, your application will be submitted instantly
The application process for Private Student Loans
- Research: Conduct thorough research on all private student loan options you think might be a good fit. The more information you have, the higher your chances of making the correct decision.
- Make a decision: Now that you have conducted thorough research, you have all the necessary information to make an informed decision. Make your decision wisely using your prior knowledge about private loans.
- Find a cosigner (if necessary): If you have a “Good Credit Score”, you won’t need a cosigner for these types of loans. However, if you have a low credit score or no credit at all, you will need a cosigner in order to get approved for loans.
- Gather all required information: Collect every piece of information required by the loan lender you chose.
- Submit your application!: Once you have all the required information and complete the application, you will be ready to submit your private student loan application.
**Note: These instructions may vary based on the loan option you choose.
We know that understanding loans can be difficult. Deciding which loan to choose can be even more difficult. Think about this wisely. Would you be able to pay the additional $4.248% in loan fees along with the interest rate of Grad PLUS Loan? If the answer is “No”, then you should consider private loans instead.
Both loans have their pros and cons but we hope this article gave you a clear idea of which one would be the best for you.