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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

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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 FAFSA 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!