The Federal Direct Graduate PLUS Loan is a loan limited to graduate students. While it has terms similar to and takes its name from the Federal Parent Loan for Undergraduate Students (PLUS), the graduate student – and not their parent – is the borrower.
Like other student loans, the Grad PLUS Loan has a 10-year repayment cycle. However, repayment is not automatically delayed until after the graduate student leaves school. Students can seek an in-school deferment option though interest will be accumulating during this time.
Interest, Fees & Lender
Federal Direct PLUS Loans have a competitive interest rate set annually. As Direct Loans, the Department of Education acts as lender. PLUS Loan fees are also charged when the loan is originated. Because Federal Direct Unsubsidized Loans have lower origination fees and interest rates than Grad PLUS, it is recommended to accept all Unsubsidized Loan eligibility prior to determining if you wish to accept Grad PLUS Loans.
Grad PLUS is a helpful way for students to address educational expenses through a federal, low-interest loan that spreads costs over a longer period and allows for manageable, monthly payments. It is a federal option to lessen reliance on alternative educational loan borrowing.
Applying for the Grad PLUS Loan
The offered amount is based on a maximum eligibility. This amount is not what is required to meet billed costs nor is it the amount students are required to borrow. Only borrow what you need with an eye on your repayment of all cumulative loan borrowing.
Some students use Grad PLUS funds to cover books and other non-billed expenses while other graduate students are only looking to borrow for billed costs. As a borrower, a graduate student may well wish to limit overall debt and elect to borrow a lesser amount than offered. Students who later wish to raise or lower their annual Grad PLUS Loan after accepting an amount would do so by contacting Student Financial Aid.
When the Grad PLUS borrower applies for the loan at StudentLoans.gov and each time a borrower accepts or increases a Grad PLUS Loan during subsequent borrowing, a credit check is performed. Students denied the Grad PLUS Loan may need to seek a credit-strong endorser for loan approval.
Adverse credit such as bankruptcy, foreclosure, tax lien, or a default determination will limit a student from borrowing the PLUS Loan. A graduate student also has an adverse credit history if the PLUS applicant has:
- One or more debts that are 90 or more days delinquent or that are in collection or have been charged off during the two years preceding the date of the applicant’s credit report; and
- A total combined outstanding balance of those debts greater than $2,085.
Master Promissory Note & Loan Counseling
The Grad PLUS Master Promissory Note (MPN) is an open-ended loan note that allows borrowing for up to 10 years. Because each loan program has a unique MPN, new Grad PLUS borrowers will have to complete the Grad PLUS promissory note even if they have an MPN on file for another type of student loan.
Students borrowing a Federal Grad PLUS Loan at UC for the first time will also need to complete specific Grad PLUS Loan Entrance Counseling. While it is similar to loan counseling required when you took out a Federal Subsidized or Unsubsidized Loan, it again demonstrates the U.S. Department of Education and UC's commitment to having you understand the responsibilities of your loan borrowing.
Failure to complete these requirements can hold up the posting of your loan funds to your student bill and creation of any refund payments and may result in late payment fees.