Of course, the situation for each student will vary widely so you'll have to dig deep on your own to know what is the best choice for your situation.
Now that the disclaimer is out of the way, the best choice would be to use the Unsubsidized Stafford loan to finance graduate school if you need to resort to loans. The major benefits to the Unsubsidized Stafford are the following:
- Low loan origination fee of 1% of the loan amount
- Fixed lower interest rate of 6.8% for the life of the loan
You'll be forced to consider other loan types due to the Unsubsidized Stafford loan's established limits on how much you can borrow per year and in aggregate. The borrowing limits are also adjustable down by your institution.
The PLUS loan is a fallback loan program designed to be your last resort. The program was created as a way for parents to borrow money for their college attending children when all other forms of financing have been exhausted. As a result you have the following major disadvantages to using the PLUS loan:
- 4% loan origination fee based on the amount of the loan at each disbursement
- Higher interest rate, 7.8% fixed.
You do have the bonus of being able to borrow up to 100% of your educational costs without any limits per year or in aggregate.
The major benefit of keeping your loans in the Direct Loan program is predictability. Many private student loans are variable interest rate loans which can result in higher payments during the course of the loan. Private loans are also not eligible for government loan forgiveness programs, such as for working in a non-profit for 10 years.