According to FinAid, Graduate and Professional Student PLUS (Grad PLUS) Loan operates in similar fashion to the parent PLUS Loan – as a low-cost supplement to borrow.
The same terms and conditions applicable to PLUS Loans for parents also apply to PLUS Loans for graduate and professional students:
- a fixed interest rate of 7.9%.
- No adverse credit history in the last 90 days.
For this reason, you may want to obtain your credit report in advance of applying for a Grad PLUS loan.
The main difference between the Graduate PLUS and Parent PLUS Loan is that graduate and professional students who are denied a PLUS loan due to an adverse credit history will not be eligible for increased Stafford Loan limits.1
To apply, you must complete the Free Application for Federal Student Aid (FAFSA) and a Federal Direct PLUS Loan Application and Master Promissory Note which are available online at www.studentloans.gov.
If you have less than average credit history, you may still receive a PLUS Loan if you obtain an co-signer who does not have an adverse credit history. A co-signer is someone who agrees to repay the loan if you fail to repay it.
To calculate the maximum PLUS eligibility, take your annual cost of attendance (COA) — which includes tuition, fees, books, and living costs — and subtract out any other financial aid you receive such as grants, or Stafford loans.
For example, if your COA is $10,000 and you receive $5,000 in other financial aid, you could borrow as much as $5,000 through the PLUS Loan.
The interest rate is fixed annually at 7.9%.2, plus up-front fees of up to 4% of the amount borrowed, which raises the maximum annual percentage rate to 8.85%. For additional details on the interest rates effective July 1, 2011, click here.
The repayment period for a Graduate PLUS Loan begins at the time the PLUS loan is fully disbursed, and the first payment is due within 60 days after the final disbursement with the repayment term of up to 10 years.
If you’re enrolled at least half-time, you’re automatically eligible for deferment with no interest charged for an additional six (6) months.
Unlike Parent PLUS loan, the Grad PLUS can be consolidated with other federal education loans for which you are the borrower, such as the Stafford and Perkins loans into one new loan held by a single lender.
One key benefit of loan consolidation is that it simplifies the repayment process by replacing multiple payments on multiple loans with a single monthly payment.
Depending on the loan amount, the term of the loan can be extended from 12 to 30 years. The reduced monthly payment may make your loan more manageable & easier to repay.
However, keep in mind that consolidating your loan may lower your monthly payments, but it will also increase the term of the loan and the total interest paid over the lifetime of the loan.
The existing discharges for PLUS loans, including closed school, false certification of eligibility, failed refund, death and disability, all remain true of the Graduate and Professional Student PLUS loans.
For more information on repaying and your obligations as a borrower, go to http://studentaid.ed.gov/.