As I understand it, you should always take out Stafford loans first! Depending on your program, you are allowed a certain amount with Stafford loans. (I'm doing Vet schools so I'm entitled to $20,500 - all of which I was approved for). That money is broken down into subsidized ($8,500, and is based on financial need) and unsubsidized ($12,000, not based on financial need). The interest on subsidized loans is payed for by the government while you are in school; for unsubsidized loans, YOU pay the interest while in school (but you may qualify for a deferment during this time). If you do get an in-school deferment, the interest will just capitalize and get added to your principal.
Basically, if you can get away with only needing $8500 for your tuition (I wish! lol), you would want to take out ONLY sub loans so you don't have to pay interest during the length of your program. But if you need to get the unsub loans too, you may still want to pay the interest while in school because the larger your principal gets, the more interest you'll pay for the life of the loan. Does that make sense?? With both these loans, repayment begins 6 months after graduation.
Now, for GradPLUS loans...
You should only take out a GradPLUS loan if the amount you recieve through Staffords will not cover the cost of your tuition (or if you don't have the personal funds to cover it). In fact, I'm not entirely sure that you can even take out a GradPLUS loan without having taken out a Stafford loan first. Anywho, with GradPLUS, you can borrow the entire remainder of the tuition, plus the cost of accomodation, books, travel, etc anything associated with your education). This is good and bad....you don't want to take out anymore than what you absolutely need. (some schools, mine included, won't authorize funds that exceed their estimated cost of attendance). With these loans, repayment begins immediately after the first disbursement...but you can ask for an in-school deferment with these so you dont have to pay until after graduation.
Generally, interest rates on Stafford loans is lower than that of GradPLUS loans and the rates are usually fixed for the life of the loan. I think we are fortunate, because PLUS loans used to be ONLY for undergraduates. So, many graduate students needed to take out Stafford and Private loans. Private loans have the worst interest rates and the rates are variable too.
To anwser your original question (after all that babble), the downfalls of GradPLUS loans vs. Stafford: higher interest rates and you have to pay ALL the interest on the loans. With Stafford, the government will at least pay the interest on your sub loans.
Now, I don't know what program you're in or what country it's in, but I've read posts on here about something called the Health Professions loan. My school doesn't accept anything other than that what I discussed, so you may have other options out there (which may or may not be better.) Do your research!
Like I said, this is how I understand it to be; but I could be wrong as this is my first time ever going through the process....so feel free to correct me if that is the case. Did this help you?? Hope so!!
