The real benefit of a gradPLUS is the federal backing and not the rate. With the federal backing comes a lot of benefits not seen in a strictly bank based alternative loan.
First and foremost is the automatic forgiveness upon your death of permanent disability-- I realize most of you are not really thinking of these things but I encourage you to consider the future after school, when you will likely be married and have children. If you dropped over dead, I can guarantee you that your alternative loan lender would be right in line to get their money out of your estate. A federally backed loan would simply go away... Same thing with a permanent total disability (not you can't just be a doc) but you really can't do much of anything... an alternative loan doesn't come with that clause either.
There would be no life insurance cost to cover in case of a loss. A gradPLUS comes with unlimited deferment throughout its life as long as you meet the deferment qualifications-- alternative loans don't have that clause because at some point in time, the bank wants to be paid. Federally backed loans have unlimited forbearance-- alternative loans have a limit to the total time they will grant you cessation from payments because at some point in time they want to be paid.
The repayment plans available are also different but the main one would be the income contingent repayment plan with a Direct Consolidation: let's say you do you 4 years of school, have $200,000 in fed debt consolidated with Direct and then decide to be a kindegarten teacher earning $24,000 a year. Direct will take a percentage of your annual salary and if you have been in the income contingent for 25 years and still haven't paid it off, the rest is forgiven. Again, you will never see that benefit with an alternative loan.
In short: i encourage you to go beyond the simple rate to rate comparison and begin to understand what benefits fed educational loans have that will be far more valuable than the rate. Start by factorig in the risk, or should I say: lackthereof.
