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COMPARING FEDERAL PARENT PLUS TO VSAC’s PRIVATE VERMONT ADVANTAGE LOAN


Are you an undergraduate student considering a private student loan? Or a parent?

Here's what you need to know if you're considering a federal parent PLUS loan or VSAC’s private Vermont Advantage loan.


All students should take out the maximum Stafford loan first.

If you need additional financing beyond the Stafford loan limit, the main choices are:



There are important differences between the loan types. Here are some things to consider:


 FEDERAL
PARENT PLUS
2012-2013
VSAC'S
VERMONT ADVANTAGE
2012-2013

One-time origination fee4%0%, 3%, or 5%
depending on cosigner credit evaluation

Interest rates

7.9%

6.6%, 7.0%, or 7.9%
depending on the repayment option you choose
  APR information
 Both loans have fixed interest rates that stay the same over the life of the loan.

With both loans, you accrue interest from the first disbursement and throughout the life of the loan.

Flexibility during repaymentHas flexible repayment and postponement options.May provide short-term hardship forbearance at VSAC’s discretion; otherwise regular monthly payments are required.
 With both loans, you continue to accrue interest if you postpone payments.

Parent or cosigner responsibilityLoan is in the parent’s name only, for the life of the loan.Requires cosigner, who is equally responsible for the loan, but may allow for cosigner release after 48 months of active repayment. Provided the student meets VSAC’s credit criteria, he or she may request that the cosigner be removed from the loan.

Death/disability cancellationLoan debt is cancelled completely if the student dies or if the parent borrower becomes totally permanently disabled or dies.Private loans do not usually have these protections.

Contact your school financial aid office for information on borrower benefits that may be available with federal Direct loans.


The bottom line?

Plan ahead for how much you think you’ll be able to repay each month. Consider the overall cost of the loan and the features that best meet your circumstances.



HOW FEDERAL EDUCATION LOANS WORK
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