Private Student Loans Or Grad PLUS Loans

If you’re heading to grad school, chances are you’ve been thinking about how to cover those hefty costs. Between tuition, fees, textbooks, and living expenses, the bills can pile up fast. Now, you might be considering your loan options and wondering whether a Grad PLUS loan is your best bet, or if you should go with a private loan for grad school instead. A lot of students wonder: “Is it possible to snag a private student loan with a better interest rate than a Grad PLUS loan?” The short answer: maybe. But let’s dive deeper into the details so you can make an informed decision about which loan works best for your situation.

What’s the Deal with Grad PLUS Loans and Private Student Loans?

Before we compare the two options head-to-head, it’s important to understand the basics of both types of loans. They may seem similar at first glance, but trust, there are some key differences that could make one a better fit for you over the other.

If you are planning to borrow for grad school, you can find everything you need in our section on Grad Student Loans.

Update for 2025: The fixed interest rate for Graduate PLUS Loans is 8.94% for loans first disbursed between July 1 2025 and June 30 2026. Proposed federal legislation would end new Grad PLUS Loans for graduate and professional students starting July 1 2026. If enacted, future borrowers would instead face lifetime federal borrowing caps. Be sure to verify current availability on studentaid.gov before applying.

What Makes Grad PLUS Loans and Private Loans Similar?

At the most basic level, both Grad PLUS loans and private student loans are used to help you cover the costs of graduate school. Whether you’re paying for tuition, textbooks, or rent, these loans can cover all the major expenses associated with grad school life. Here’s where they’re similar:

• Credit-Based: Both loans are credit-based, meaning the lender will look at your credit history to determine whether or not you’re eligible. If you’ve got less-than-stellar credit, no worries—both types of loans may allow you to use a cosigner with good credit to boost your chances of getting approved.
• Borrowing Limits: Grad PLUS loans and private loans both offer high borrowing limits, so they can potentially cover your entire cost of attendance (including living expenses). But, there are some caveats—let’s get into those next.

What Makes Private Loans and Grad PLUS Loans Different?

Now, here’s where things get interesting. While both types of loans serve a similar purpose, they are fundamentally different in some important ways. Let’s break it down:

• Eligibility: Grad PLUS loans are only available to graduate students, while private student loans are open to both undergrads and graduate students. If you’re a graduate student, you can access both options—but your undergrad friends can’t use a Grad PLUS loan for their education.
• Interest Rates: This is a big one. Grad PLUS loans come with a fixed interest rate, meaning your rate stays the same throughout the life of the loan. That’s good for stability, especially in the long run. Private loans, on the other hand, typically come with variable or credit-dependent fixed interest rates. This means your rate can change over time, or differ based on your credit score, which could result in higher payments down the road if rates go up or your credit isn’t excellent.
• Repayment Flexibility: Grad PLUS loans come with a variety of repayment options. You can choose between a standard, graduated, extended, or income-driven plan. Plus, you can consolidate them later if needed. On the flip side, private loans often don’t offer this kind of flexibility. The repayment terms vary by lender, and they tend to be less customizable.
• Federal Benefits: Since Grad PLUS loans are federal loans, they come with benefits that private loans don’t have. For example, you might qualify for federal loan forgiveness programs like Public Service Loan Forgiveness (PSLF) if you work in the public sector. Private loans don’t offer any forgiveness options like that.

Can You Get a Better Deal with Private Loans?

Okay, so now we’re at the heart of the question: Can you actually get a better deal with a private student loan than with a Grad PLUS loan?

The short answer? It depends.

If you’re the type of person who’s got a rockstar credit score (think 700 or above), you may be able to snag a private loan with an interest rate that’s lower than what the Grad PLUS loan offers. It’s possible, especially if you shop around with different lenders. However, there’s a huge catch: most private loans come with variable interest rates. So while your rate might start lower than the Grad PLUS loan’s fixed rate, it could spike up over time, leaving you with higher payments down the road.

CollegeWhale Tip: If long-term stability and predictable payments matter, the fixed rate of a Grad PLUS loan usually beats a private loan’s tempting but risky variable rate.

The Case for Grad PLUS Loans

Here’s the thing: while private loans may seem like a good option if you qualify for a lower rate, the peace of mind and stability of a Grad PLUS loan often outweighs the initial lower interest rate from private loans. Why? Because with Grad PLUS loans, you get:

• Fixed Interest Rate: Your rate stays the same, which makes it easier to budget and plan for the future. Private loan rates can go up, and that’s not something you can control.
• More Repayment Options: You’ve got options when it comes to how you repay the loan, which means if your financial situation changes, you’ve got some flexibility. Private lenders typically don’t offer this kind of flexibility.
• Federal Benefits: You’ll have access to federal repayment plans, income-driven options, and the potential for loan forgiveness—benefits that private lenders just can’t match.

So, What Should You Choose?

If you’re trying to decide between a private student loan and a Grad PLUS loan for your grad school expenses, here are a few things to keep in mind:

• Have good credit? If you’ve got excellent credit, a private loan could be worth exploring, especially if you can secure a lower rate. Just keep in mind that a variable rate could come back to bite you later.
• Looking for stability? If you prefer the peace of mind that comes with a fixed interest rate and flexible repayment options, a Grad PLUS loan is probably the safer bet. You’ll know exactly what your payments will be each month, and you’ll have more room to breathe if things get tough.
• Need forgiveness options? If you’re planning on working in public service or want the potential for federal loan forgiveness, Grad PLUS loans are your best option. Private loans don’t offer these kinds of perks.

At the end of the day, both private student loans and Grad PLUS loans have their pros and cons. It’s all about weighing your options, considering your long-term financial goals, and choosing the one that works best for you. Don’t rush the decision—take your time to understand your loan options, and consider talking to a financial advisor or your school’s financial aid office for more personalized guidance.

CollegeWhale Tip: Compare your fixed-rate federal option against at least three private lenders before deciding—rates vary widely, and the right choice depends on your credit, income, and long-term goals.