An educational SlideShare comparing Private Student Loans to Parent PLUS and their impact on overall college costs and savings.

1. Parent PLUS Loans vs.
Private Student Loans
Which Should You Take?

2. Why Parent PLUS Loans vs.
Private Student Loans?
• For most students Federal Direct Loans do not cover the
balance of attending school
• With constant messaging that students should “only take
federal loans,” families often consider the Parent PLUS
loan as the only additional option

3. Why Reconsider Parent PLUS?
For families with good credit – a Private Student Loan
(PSL) is often a more affordable option to fund education
than a Parent Plus Loan!

4. What is the Parent PLUS Loan
Program?
• A loan provided from the U.S. Department of Education
for undergraduate school purposes
• PLUS loans are not offered directly to undergraduate
students, rather they are offered directly to parents of
eligible students.

5. Why was Parent PLUS created?
• To supplement loans that were maxed out in the
student’s name, and not serve as the primary source of
education funding
• To help cover the cost of attendance for families with
poor credit
• For parents to help students pay for college

6. Who is Eligible for a Parent PLUS
Loan?
Parents who are borrowing on behalf of a dependent, who
is enrolled at least half time in school.
Parents are subject to a credit check for the following….

7. Loan Terms of Parent PLUS
Loans
• Limited to the cost of attendance per school
• No grace period
• Repayment begins 60 days after disbursement or
deferred until 6 months after the student graduates
• Interest Rate fixed at 7.21%, with an Origination Fee of
4.288% (expected to rise to 4.292% before years end)
• 10 year Repayment Plan, and like all student loans can
not be discharged in bankruptcy

8. Know Your Credit
• With good credit, Private Student Loans often provide
better rates and terms for borrowers with cosigners
• Families who receive PLUS loans end up paying more
due to relatively expensive loan terms, which is why it is
so important to know your credit

9. What are Private Student Loans?
• Credit based loans offered by private lenders at both
variable and fixed interest rates
• The loan is in the student’s name
• A cosigner is usually required
• Cosigner release is often available with on-time
payments

10. Who is eligible to take advantage
of PSLs?
Students should first fill out the Free Application for Federal
Student Aid (FAFSA) to determine federal aid available….
If you are a parent of a prospective college student who….
Is attending an institution that is eligible for student loans
Has a difference in financial aid funding available than the amount needed to
pay for school
Has excellent credit
You are likely eligible to take advantage of the cost
savings of a Private Student Loan over a Parent PLUS.

11. Private Student Loan Terms
Loan Terms cuScholar Loans
Borrowing Limits Cost of attendance – financial aid
Interest Rate Variable interest rate based on 3-Month
Repayment Term 10 years
Origination Fee No Origination Fee
Cosigner Release Co-signer released after 24 on-time
Eligibility requirements
received
Libor + 3.24% to 9.24%
payments (Interest + Principal)
 Be enrolled at least half time in an undergraduate program at an eligible
school
 Be a US citizen or Permanent Resident
 Creditworthy
* Terms and Eligibility requirements vary by lender

12. Private Student Loan Repayment
Terms
12
Types of Payments cuScholar Loans
In school Repayment
(Up to 5 years)
$25 minimum Proactive monthly
payments
In Repayment Period
(Begins 6 months after graduation or
when enrolled less than half-time)
$50 Minimum monthly payments

13. Private Student Loan Benefits
• Students can start making minimal monthly payments
while in school to reduce the cost of borrowing and help
build credit
• Interest rates are usually based on the borrower and
cosigner’s credit history, which can result in better rates
for borrowers with good credit
• Provides families the funding needed to fill the financial
gap between the cost of attendance and any financial
aid received
• Allows students to have “skin in the game”

14. Comparing Loan Terms
Parent PLUS Loan
• Fixed interest rate of 7.21% +
a 4.288% origination fee.
• Immediate repayment after 60
days of disbursement date
• Standard Repayment- Fixed
payments for 10 years ($50
minimum payments)
• Graduated repayment-
Increasing monthly payments
over the course of 10 years
• Extended Repayment
cuScholar Private Loan
• Variable interest rate based on
the 3 Month Libor + 3.24% to
9.24%
• No origination fee
• $25 minimum proactive
payments while in school
• Minimum $50 payment once in
repayment period
• 10 year repayment term
• Ability to cover 90 days past
due balances with schools

15. Comparing Loan Benefits
Parent PLUS Loan
• Multiple repayment plans and
terms
• Minimum $50 payment
• No interest rate reductions
• No cosigner release
• Ineligible for Federal Student
Loan Forgiveness, Income-based
repayment
• Ineligible for future loan
refinancing
cuScholar Private Loan
• Minimum $25 payment while in
school
• 1% interest rate reduction after
1/10th of the loan is paid off
• 0.25% interest rate reduction
with automatic ACH payments
• Cosigner release
• Eligible for future loan
refinancing

16. So, why don’t more people with
good credit take Private Student
Loans?
• Many people are often advised to only take private loans
out as a last resort
• However, private loans often provide more benefits at
lower costs to those with good credit.

17. Historical Rates: Parent Plus vs.
Private
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
Historical Rates: PLUS vs. Private
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Rates
Federal Direct PLUS
Loans
3-Month LIBOR + 3.24%
3-Month LIBOR + 9.24%
Historically a private student loan (borrower with good credit—
receiving low interest rates), offers better rates in comparison to
the fixed rate of Parent PLUS Loans

18. Repayment Comparison
Repayment Options cuScholar Loan ParentPlus
Party Responsible
Student Parent
Held accountable for loan
Standard
Level monthly payment
Graduated
Initial low monthly payments &
increases over time
Consolidation
Combine separate loans into one
Deferment
Temporary postpone principle
and/or interest payments
Forbearance
Postpone or reduce payments
due to economic hardship
Past Due Balances
Funds may be used for past due
balances
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X
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 X

19. Yearly Amortization Schedule
cuStudentLoans
Loan Year
Private 1 $333.54 $851.46 $9,148.54
PLUS 1 $729.10 $740.06 $9,707.08
Loan Year
Cumulative
Interest
Cumulative
Interest
Cumulative
Principle
Cumulative
Principle
Balance
Balance
Private 5 $1,356.76 $4,568.26 $5,431.74
PLUS 5 $3,051.26 $4,294.26 $6,152.60
Loan Total Paid
Total Interest
Paid
Private $11,849.34 $1,849.34
PLUS $14,692.28 $4,692.28
Parent PLUS
Loan Amount $10,000
Interest Rate 7.21%**
Origination Fee 4.288%
Monthly Payment $122.43
Loan Term 10 years
Loan Year
Cumulative
Interest
Cumulative
Principle
* Based on 3 month LIBOR rate and good
credit
** Fixed Rate for loans first disbursed on or
after 7/1/14 and before 7/1/15
Balance
Private 10 $1,849.34 $10,000.00 $0
PLUS 10 $4,245.37 $10,447.14 $0
Loan Amount $10,000
Interest Rate 3.47%*
Origination Fee 0%
Monthly Payment $98.75
Loan Term 10 years

20. Private vs. Parent PLUS Loan
Savings Comparison
cuScholar Loan Parent PLUS Loan
Loan Balance $10,000 $10,000
Loan Interest Rate 3.47%* 7.21%**
Origination Fee 0% 4.288%
Loan Term 10 years 10 years
Monthly Loan
$98.75 $122.43
Payment
Number of Payments 120 120
Total Interest Paid $1,849.34 $4,692.28
Total Principle and
Interest Paid
$11,849.34 $14,692.28
* Based on 3 month LIBOR rate and good credit
** Fixed Rate for loans first disbursed on or after 7/1/14 and before 7/1/15

21. Where and How to Apply?
If you have a good credit score and are looking to save
money over the life of a loan, consider taking out a Private
Student Loan.
cuScholarPrivate Student Loan is available at:
www.apply.custudentloans.org