NOTE: If you have strong credit (or can secure a creditworthy cosigner) you may want to compare private student loan options. There could be a cost savings on both the fees (most lenders offer zero origination fees) and interest rates (starting as low as around 3.93% in today’s marketplace).
The Grad PLUS Loan, also called a Graduate PLUS Loan, is a federal student loan available to students attending graduate school and professional school. It offers a fixed interest rate and flexible loan limits.
Eligibility for the Grad PLUS Loan does not depend on demonstrated financial need, but you need to file the FAFSA (Free Application for Federal Student Aid) to qualify. You also have to pass a simple credit check.
The Grad PLUS Loan allows you to borrow up to the full annual cost of attendance (COA) minus other financial aid received (scholarships, fellowships, grants, federal student loans, private student loans). There is no aggregate (cumulative) loan limit.
Key benefits of the Grad PLUS Loan:
The first step in the application process is to file the FAFSA (Free Application for Federal Student Aid) or Renewal FAFSA (for returning students) at FAFSA.ed.gov. The FAFSA is a requirement to borrow from the Grad PLUS Loan program.
To obtain a Grad PLUS Loan, you should apply for a PLUS Loan at StudentLoans.gov or contact the financial aid office at your college or university. You will use the same FSA ID used to sign your FAFSA to apply for your Grad PLUS Loan.
Students enrolled in graduate school and professional school programs can take out Grad PLUS Loans.
Degree programs and common examples:
Loan eligibility and the loan limits are not based on demonstrated financial need. Even wealthy students can borrow through the program.
Eligibility Not Based On
To qualify for a Grad PLUS Loan, you can’t have an adverse credit history.
What causes an adverse credit history:
Even if you have an adverse credit history, you can still qualify for a Grad PLUS Loan by getting a cosigner (called an endorser) who does not have an adverse credit history. A cosigner is a co-borrower, equally obligated to repay the debt. If you don’t have an adverse credit history, you don’t need a cosigner to apply for the loan. If you get denied for a Grad PLUS Loan, you can re-apply with a qualified cosigner. (Note: If you are denied a Grad PLUS Loan because of an adverse credit history, you don’t become eligible for higher Direct Unsubsidized Loan limits.)
The interest rates on Grad PLUS Loans are fixed and do not change over the life of the loan. The interest rate for the 2018-2019 academic year is 7.6%.
Every year on July 1, interest rates are reset based on current market rates. The interest rates are based on the 10-year Treasury Note (determined each year by the final auction prior to June 1) plus a fix margin (see table).
|Loan Program||Interest Rate Formula||Interest Rate Cap||Current Interest Rate
|Grad PLUS Loan||10-Year Treasury + 4.60%||10.5%||7.6%|
The interest on a Grad PLUS Loan starts to add up (accrue) from the date the loan is first disbursed. If you don’t pay the interest as it accrues, it will be capitalized (added to the loan balance), increasing the amount of the loan.
The current fee on Grad PLUS Loans is 4.248%. Fees are deducted from each loan disbursement. You can ask the college financial aid office to increase the loan amount to cover the fees, up to the annual loan limit.
The annual limit on a Grad PLUS Loan is equal to your school’s total cost of attendance (COA) minus any other financial aid received. There is no aggregate (cumulative) loan limit.
The cost of attendance includes:
The Direct Loan program sends the Grad PLUS Loan funds to your school to be credited to your student account. In most cases, the loan will be sent (disbursed) in at least two installments.
Loan funds are credited to your account in this order:
If any loan funds remain in your account, the credit balance will be refunded to you by check, cash, debit card, or electronic funds transfer (EFT) to your bank account. Remember, the refund must be used to pay for your direct and indirect education expenses, such as textbooks, supplies, and equipment.
While you are enrolled in school at least half-time, your Grad PLUS Loan will be placed into deferment, which means you don’t have to make any payments. In addition, you don’t have to make payments during the 6-month grace period after you graduate or drop below half-time enrollment status. Just remember that interest on your loan will start to accrue (add up) as soon as all of the loan funds are sent to your school. Even though you aren’t making any payments, interest is still adding up.
The standard repayment term on Grad PLUS Loans is 10 years. However, you can qualify for a longer repayment term if you consolidate the loans or have more than $30,000 in federal student loans with a single lender.
Unlike Parent PLUS Loans, Grad PLUS Loans are eligible for nearly all of the different repayment plans offered by the U.S. Department of Education.
Eligible repayment plans:
Yes. You can cancel the loan or reduce the loan amount by returning funds to the lender.
Your graduate school must notify you when it credits your student account with Grad PLUS Loan funds. This notification must be sent to you no earlier than 30 days before, and no later than 30 days after, the school credits your account. You may cancel all or a portion of the loan by informing the school within 14 days after the date the school sends this notice, or by the first day of the payment period, whichever is later. (The first day of the payment period is usually the first day of the term. Ask the school about the first day of the payment period.)
|Direct Unsubsidized Loan||Perkins Loan||Grad PLUS Loan|
|6.6% fixed interest rate||5% fixed interest rate||7.6% fixed interest rate|
|1.062% fee*||No fee||4.248% fee*|
|Demonstrated financial neednot required||Exceptional financial need required||Demonstrated financial neednot required|
|Annual borrowing limit: $20,500 ($40,500 for medical students)||Annual borrowing limit: $8,000||Annual borrowing limit: Cost of Attendance (COA) minus other financial aid received|
|You are responsible for paying all interest||Federal government pays the interest while you are in school, during the grace period, and during periods of authorized deferment.||You are responsible for paying all interest|
* For loans borrowed through September 30, 2019
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