Below are some of the most common and misunderstood reasons families choose alternative loans over the Federal PLUS Loan Program.

Assumption: I want my child to be responsible for this debt, not me. The alternative loan gives me that option.

This is true; however, most alternative loan programs require a co-signer, and co-signers are usually a parent of the student borrower. A co-signer is equally liable to repay the loan obligation. Furthermore, once the loan is disbursed, it is listed on both the co-signer’s and the student borrower’s credit report. Any outstanding debt and delinquencies the borrower makes directly impacts the co-signer’s credit rating.

Assumption: I need to be able to delay payments while my child is in school. The alternative loan gives me that option.

True, but a Manageable PLUS Loan from PNC Bank also gives you this option. PNC Bank has developed a unique program to allow a parent to delay principal and interest payments while their dependent student is enrolled at least half-time for up to four academic years, and still have ten years to repay.

Assumption: The alternative loan is easier to get. And I cannot qualify for a PLUS Loan.

False. By utilizing the PNC Bank PLUS Loan pre-qualification via the Web, parents can typically receive a decision much faster. In addition, the criteria for qualifying for a Federal PLUS Loan is often not as rigorous as that for an alternative loan. In most cases, if the borrower does not qualify for a Federal PLUS Loan, they probably will not qualify for an alternative loan.

FEDERAL PLUS LOANS vs. ALTERNATIVE LOANS COMPARISON CHART
Federal PLUS Loans		Alternative Loans
	Interest rate is fixed at 8.50%		Variable interest rate usually will not exceed 18% to 21%
	Accrued interest capitalizes once at final repayment when borrowed through PNC Bank		Accrued interest may be capitalized monthly, quarterly, or once at repayment
	May borrow up to the cost of education less other aid		May borrow up to the cost of education less other aid
	Credit check based upon federal standards (easier to qualify); no debt-to-income ratios or credit-scoring		Borrowers must pass a comprehensive credit check
	Federally insured against death and disability for both the parent and student		Not federally insured against death and disability
	Wide selection of deferment privileges available		Variable interest rate (changes monthly or quarterly)
	Ability to easily consolidate PLUS loans (even for multiple students) — interest rates are fixed at 8.50%		Limited forbearance and consolidation options available
	A 0.70% interest rate reduction for automatic payments from any bank account (PNC Bank’s PLUS Program)		Payments may be deferred while student is enrolled at least half time
	Parent is responsible for payment		Student is responsible for repayment; however, a co-signer is equally liable, and the loan – and payment history – are listed on a co-signer’s credit report
	Delayed payment option available through forbearance (PNC Bank’s Manageable PLUS Program)