Graduate PLUS Loans
An Overview of Graduate PLUS Loans
The PLUS loan program used to be just for parents,
but that changed in 2006, when the PLUS loan program was
opened up to graduate and professional students. Just to be
clear, the PLUS loan program is open to parents of undergraduates
and to graduate / professional students, not directly to
undergraduate students. The Graduate PLUS program is very
similar to the
Parent PLUS program
However, there are a few differences and we will make
sure to highlight them below. The first and most important
difference is that you are the borrower, not your parent.
FFELP vs. Direct
Graduate PLUS loans can be administered either through the
FFELP or Direct Loans programs. The graduate or professional
school makes the determination which program it wants to
offer its students.
Under the FFELP program, you will get your PLUS loan from a
lender (like Discover Financial Services, Sallie Mae, or CitiBank).
In this situation, you are responsible for deciding which lender
is right for you. Your school will often present you with a
Lender List, proving you with a number of lender options. You
can choose from this list or do your own research and
find a lender
that may not be on the list.
Graduate PLUS Loan Limits
You can take out a Graduate PLUS for up to the cost of attendance
(COA) minus any other financial aid you receive. Before you can
take out a Graduate PLUS loan, however, you need to have maxed
out your eligibility for the
Stafford Loan program
(both subsidized and unsubsidized).
Graduate PLUS Interest Rates
Picking a lender for the Graduate PLUS loan likely won't
come down to the interest rate since the government sets the
maximum interest rate for PLUS loans. If your school uses the
Direct Loans program, the interest rate is 7.90%. For FFELP
schools, the maximum rate is 8.50%. You may see lenders that
offer slightly lower rates.
Upfront Fees on Graduate PLUS Loans
A Graduate PLUS loans can have an origination and a federal
default fee. The origination fee can be up to 3% and is used by
a lender to cover administrative costs. The federal default fee
can be up to 1% and is intended to fund services to help
student-loan borrowers who experience difficulty making their
payments so they can avoid some of the expense and consequences
of defaulting on their loans. Both fees are deducted from the
principal, meaning the amount you borrow and the amount you
actually receive will be different. Some lenders may cover all
or a portion of these fees. Zero-fee loans are ones where the
student does not have to pay either an origination or default fee.
Repayment of Graduate PLUS Loans
With a Graduate PLUS loan, the repayment period starts within
60 days of full disbursement, as is the case for the
Parent PLUS loan.
However, you are allowed to postpone payment until after you
leave school. Keep in mind, though, that interest will be
accumulating while you are in school (but it will not be
capitalized until your in-school deferment is over).
Applying for a Parent PLUS Loans
You will need to complete the
to apply for a Graduate PLUS loan. In addition you must also
complete a PLUS loan application and sign a master promissory
note. You will need to pass a modest credit check to be
eligible. You are considered to have an adverse credit history
if you are 90 or more days delinquent on any debt or if, within
5 years of the date of the credit report, you have been the
subject of a default determination, bankruptcy discharge, foreclosure,
repossession, tax lien, wage garnishment, or write-off of a
Federal Student Aid debt.
If you don't pass the credit check, you will basically need
someone who does pass the credit check to co-sign on the loan
and agree to pay it back if you are unable to.
Find a Graduate PLUS Loan
You can use our Student Loan Marketplace to
find and compare Grad PLUS loans!