Many PCOM students will consider funding their educational and living expenses with the federal Direct Unsubsidized Loan, federal Direct PLUS loan and private student loans; or a combination of the three. Learn more about this topic from the Department of Education.
After borrowing the Federal Direct Unsubsidized loan, a common question during the PCOM financial aid process is whether to borrow a Federal Direct PLUS loan or a private student loan. It is important to understand the differences between the Federal PLUS loan and private student loans among several key areas such as interest rates, fees, repayment plans, forgiveness terms, loan consolidation and more.
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Federal Direct PLUS Loan |
Private Student Loan |
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| How to Apply |
Login to studentaid.gov and complete:
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| Eligibility |
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| Cosigner or Endorser |
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| Lender |
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| Interest Rate |
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| Interest Accrual |
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| Interest Capitalization |
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| Loan Fees |
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| Loan Limit |
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| Aggregate Lifetime Borrowing Limit |
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| Repayment Grace Period |
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| Repayment Plans |
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| Consolidation |
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| Public Service Loan Forgiveness (PSLF) |
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| Death/Disability |
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Our office recommends carefully researching private student loans for graduate or medical school. Use the below questions as guides for learning more about the loans you research.
Fixed interest rates keep the same rate for the life of the student loan.
Variable interest rates usually fluctuate on a quarterly basis. During repayment, your monthly payment amount may increase or decrease based on changes to the variable interest rate.
Using a credit‐worthy cosigner or endorser may dramatically decrease your student loan interest rate.
A bank may offer better interest rates on their student loans if the borrower has other banking products with the company such as a checking account, savings account, mortgage and more.
It is very important to understand how interest capitalizes, when it capitalizes and how it affects your student loans.
Interest capitalization is when the interest accrued on a loan is added to the principal amount of the loan, resulting in a new, higher principal.
| With yearly capitalization | Without yearly capitalization | |
| Principal amount | $10,000 at 10.0% fixed interest rate |
$10,000 at 10.0% fixed interest rate |
| Year 1 interest accrued | $1,000 | $1,000 |
| New principal amount | $11,000 | $10,000 (plus $1,000 in interest accumulated) |
| Year 2 interest accrued | $1,100 | $1,000 |
| New principal amount | $12,100 the loan is now accumulating interest on $12,100 |
$10,000 (plus $2,000 in interest accumulated) |
Service, disbursement or origination loan fees may be deducted from the amount borrowed before the loan disburses to the school.
For example, a $10,000 student loan may have a 3.0% origination fee. That means only $9,700 of the original $10,000 borrowed will actually pay to the school. However, you will still owe $10,000 in a principal amount.
Ask if the loan has any loan fees such as origination fees or service fees.
Find out if you will receive a grace period on your loan repayments after graduation.
Once you are no longer enrolled at least half-time in an eligible program, a grace period may grant you a period during which you are not required to make loan payments. If your loan has a grace period, payment will be due at the conclusion of the grace period.
Medical students should ask if the loan has any deferment options during residency years.
Ask lenders about deferment options to reduce or delay repayment in case of economic hardships. In case you ever have difficulty making payments, it is important to know your options for deferment. There may also be other options such as changing your repayment plan.
