Direct Loans Compared: Stafford vs. PLUS Loans

Stafford Direct Loans and PLUS loans are both financial aid loans made directly by the federal government. While the two have many features in common, they do have key differences that should be considered before you choose which is right for you.

Who is Responsible for Repayment?

With a Stafford loan, the loan is the student's name and is repaid by the student. A PLUS loan, however, is made to the parents of the student, and they are responsible for repayment.

Applying for a Loan

When a student applies for a Stafford loan, he or she must fill out a FAFSA (Free Application for Federal Student Aid), which is available from the school. When applying for a PLUS loan, the student's parents will need to fill out an application and promissory note. 

The U.S. Department of Education will let the parents know if they are eligible, while the student applying for a Stafford loan will be informed by their school of their eligibility. Parents applying for a PLUS loan must also pass a credit check.

Available Amounts

The amount you will receive from a PLUS loan is equal to your yearly education costs minus the amount of any other financial aid the you receiving. The amount of a Stafford loan will depend on your school costs, whether you are a graduate or undergraduate student, whether you are dependent or independent, and other factors.

How the Loan is Paid Out

The funds from both type of loan must be used for educational expenses, such as tuition, other fees and room and board. There will be at least two disbursements over the course of the academic year. Any excess money will be released to you, or your parents, as cash or a check. In the case of a PLUS loan, these extra funds may be placed into your school fund. In the case of a Stafford loan, you may choose to have your school hold the excess money over until it is needed.

Rates and Fees

The variable interest rate for a 2008-2009 PLUS loan is 5.01%. The rate for a Stafford loan disbursed on or after July 1, 2008 is fixed at 6.0%. There is a fee of up to 4% of the total loan amount applied to PLUS loans, and a fee of up to 2% for a Stafford loan.  Loan rates are revised each year on first of July.


The terms of repayment for both types of loan are similar. You or your parents will have up to six months after you graduate, withdraw or move to less than half-time status, to begin repaying the loan. Both types of loan may be canceled, but only under specific and unusual circumstances. To find out more about PLUS and Stafford loans, as well as other types of financial aid, visit the Department of Education's financial aid Web site (

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