Grad PLUS Loans – Everything You Need to Know
Graduate school can be expensive, and many students need additional financial assistance beyond what they receive from scholarships or grants. One option is a federal grad plus loan, which allows you to borrow up to the cost of attendance minus any other aid received.
In this article, we’ll discuss eligibility requirements for these loans as well as interest rates and fees associated with them. Then, you can make an informed decision about whether taking out a grad plus loan makes sense for your situation.
What Is a Grad PLUS Loan?
A graduate PLUS (or “grad PLUS”) loan is offered by the U.S. Department of Education through its direct loan program It provides funding specifically designed for graduate-level study at accredited institutions in the United States or abroad.
Grad PLUS loans have some similarities to other types of federal student loans, such as Direct Subsidized and Unsubsidized loans, but there are also some key differences. For example, Grad PLUS loans have higher interest rates than other types of federal loans, and they also require a credit check to be approved.
In addition, the maximum amount that can be borrowed through a Grad PLUS loan is the cost of attendance for the student’s program, minus any other financial aid they have received.
The maximum amount available under this type of student financing depends on several factors including tuition costs, living expenses while attending school full-time, books/supplies needed during the enrollment period, and so on. But generally speaking, borrowers may take out enough money to cover most of their educational-related expenses.
Eligibility Requirements for a Graduate PLUS Loan Application
In order to qualify and apply for Federal Student Aid, direct and unsubsidized lending programs, students must meet certain criteria These include being enrolled on at least a half-time basis within an eligible institution, having satisfactory academic status, and demonstrating sufficient credit history not defaulted past debt obligations, if applicable.
It’s imperative to note that those who do possess a good score will likely require a cosigner to help secure the funds necessary to complete the degree successfully.
What are Interest Rates and Fees Associated with Grad PLUS?
Grad PLUS loans are federal student loans that graduate or professional students can use to pay for their education expenses. Interest rates and fees associated with Grad PLUS loans are as follows:
- Interest rates – The interest rate on Grad PLUS loans is fixed and determined each year by the federal government. The interest rate for the 2022-2023 academic year is 7.54%.
- Origination fees – Grad PLUS loans have an origination fee, which is a percentage of the loan amount. For loans disbursed between October 1, 2022, and September 30, 2023, the origination fee is 4.228%.
- Repayment fees – There are no prepayment penalties for Grad PLUS loans. However, if you miss a payment, you may be charged a late fee.
Interest on Grad PLUS loans accrues while you’re in school and during any deferment or forbearance periods, which means you’ll ultimately pay more than the amount you borrowed. It’s also just as crucial to compare the interest rates and fees of Grad PLUS loans with other types of student loans.
How Do I Apply for My Own Personal Graduate PLUS Account?
To apply for a Graduate PLUS loan, you will need to follow these steps:
1. Complete the Free Application for Federal Student Aid (FAFSA)
To be eligible for a Graduate PLUS loan, you must first complete the FAFSA. The FAFSA is available online at the Federal Student Aid website.
2. Meet eligibility requirements
To be eligible for a Graduate PLUS loan, you must be enrolled in a graduate or professional degree program at least half-time, have a good credit history, and meet other eligibility requirements.
3. Complete the Graduate PLUS loan application
You can complete the application online at the Federal Student Aid website.
4. Complete the Master Promissory Note (MPN)
If you’re approved for a Graduate PLUS loan, you’ll need to complete the MPN. This is a legal document that states that you promise to repay your loan and explains the terms and conditions of your loan.
5. Complete Entrance Counseling
As a first-time Graduate PLUS loan borrower, you are required to complete entrance counseling, which is a brief session that provides information about the loan and your responsibilities.
Once you’ve completed these steps, your school’s financial aid office will process your loan and disburse the funds to your account. It’s important to remember that a Graduate PLUS loan is a type of debt, and you’ll be responsible for repaying it, so be sure to borrow only what you need and have a plan to repay the loan after graduation.
Some Risks Associated with Grad PLUS Loans
Unlike some other federal student loans, Grad PLUS loans are not eligible for forgiveness programs such as Public Service Loan Forgiveness or Teacher Loan Forgiveness. While Grad PLUS loans do offer some repayment options, such as income-driven repayment plans, these options may not be as flexible as those available for other types of federal student loans.
In addition, since Grad PLUS loans are intended to cover the cost of attendance beyond what is covered by other types of federal loans, it’s possible to end up with a significant amount of debt if you rely heavily on these loans to finance your education.
Ultimately, Grad PLUS loans have higher interest rates than other types of federal student loans, which means that you may end up paying significantly more in interest over the life of the loan. Taking these into account, develop a plan to navigate your finances.
