Grad PLUS Loans

The Grad PLUS Loan offers financial assistance to graduate and professional students to help pay for their school expenses. The Department of Education administers the Grad PLUS Loan program.

Either the student or his or her parents may apply for the loan, and that person becomes the borrower once the loan is approved. Students may qualify for this loan if they are enrolled at least half-time in an approved course of study and demonstrate satisfactory progress towards their degree or certificate.

All applicants for the loan, must meet basic eligibility requirements. Specifically, they must not have adverse credit, have no delinquent student loan debt and show the ability to repay the loan. Borrowers must apply for the loan using the Federal Application for Federal Student Aid (FAFSA). Below is more information about the Grad PLUS loan and details on how to apply for one.

What is a Grad PLUS Loan?

For graduate and professional students, the Grad PLUS Loan is a type of loan that helps cover the cost of tuition at an approved university or institution. The Department of Education is the lender for Grad PLUS Loans. The loan is available to graduate or professional students enrolled in a program that leads to a graduate or professional degree or certificate.

Either the student or their parent may request the loan. The person seeking the loan becomes the borrower and is responsible for repaying the loan under the guidelines specified by the lender. Parents who would like to request loans on behalf of their children may also apply for a Parent PLUS loan.

Eligibility Requirements for a Grad PLUS Loan

A student may qualify for a FAFSA Grad PLUS Loan if they are enrolled at least half-time in a graduate or professional program. Also, a person can apply for a Grad PLUS student loan if they are the parent of a graduate student enrolled at least half-time in graduate studies. Anyone applying for a loan must also meet the general eligibility requirements for federal student aid.

Applicants for a loan must be a U.S. citizen or an eligible non-citizen. They must also have a valid Social Security Number and be registered with Selective Service if they are a male. Borrowers must also demonstrate creditworthiness and must not be in default or owe money on a federal student loan or federal grant.

The student applicant must hold a high school diploma or a General Educational Development (GED) certificate. Those students who were homeschooled must have completed their coursework in a setting approved by state law. Student applicants for a Grad PLUS Loan must be enrolled as a regular student in an approved program and must show satisfactory academic progress towards their program of study.

What is the Grad PLUS Loan limit?

Loan limits for the Grad PLUS Loan are based on the student’s school, along with any other financial assistance the student receives. In general, the Direct Grad PLUS Loan has a maximum loan limit equal to the student’s cost of attendance minus other financial aid the student receives. The cost of attendance includes the following:

  • Tuition and fees.
  • On-campus room and board.
  • Books.
  • Transportation.
  • Dependent care (if applicable).

When calculating the Grad PLUS Loan limit, the program subtracts from the loan the amount equal to other assistance the student may be receiving. Examples of other assistance include private loans, scholarships or grants.

When do I begin repaying my Grad PLUS Loan?

Student borrowers must begin repayment on their FAFSA Grad PLUS Loan once they graduate. The student may defer repayment of their Grad PLUS Loan after graduation depending on criteria approved by the lender.

Related Article: FAFSA Information for Parents

Parent borrowers must begin repayment immediately after the lender disburses the loan. However, parent borrowers may request a deferment while the student is enrolled in school at least half-time. The postponement may last up to 6 months after the student experiences one of the following changes in their enrollment status:

  • Graduate.
  • Leaves school.
  • Drops below half-time enrollment.

How do I repay my Grad PLUS Loan?

Once repayment for a Grad PLUS Loan begins, the borrower must begin to make loan payments to his or her loan servicer. The servicer manages repayment of the borrower’s Direct Grad PLUS Loan. Specifically, the servicer collects payments, keeps track of the remaining loan balance, calculates interest and handles all communication with the borrower about the loan.

The loan payment includes the principal amount of the loan plus interest and fees. Interest accrues on the loan while the borrower is not making payments. The borrower may opt to pay the accrued interest, or have it added to the balance of the loan once they begin making payments.

Borrowers have several options to repay their loan. Each option has different eligibility requirements. Students must apply directly with the loan servicer for one of the loan repayment plans explained below.

Standard Repayment Plan

Under this plan, payments are a fixed amount that ensures the Direct Grad PLUS Loan is repaid in either 10 or 30 years. All borrowers are eligible for the plan.

Graduated Repayment Plan

All borrowers are eligible for this plan. Payments are lower at first then, increase every 2 years. The amount of the payment ensures the loan is repaid in either 10 or 30 years.

Extended Repayment Plan

This payment plan features either fixed or graduated payments that ensure the loan is paid off within 25 years. To be eligible, the borrower may not have more than $30,000 in outstanding Direct Loans or Federal Family Education Loan (FFEL)

Pay as You Earn Repayment Plan (PAYE)

The borrower’s payment for their Grad PLUS Loans is calculated each year and are no more than 10 percent of their discretionary income. The amount must be recalculated every year and is based on family size and income. Students must have a high debt-to-income ratio to qualify for this plan.

Income Based Repayment Plan (IBR)

The monthly payment for the IBR is either 10 or 15 percent of the borrower’s discretionary income. Borrowers must have a high debt-to-income ratio to qualify for an IBR plan.

Income Contingent Repayment Plan (ICR)

With an ICR plan, borrowers pay the lesser of 20 percent of discretionary income or the amount the borrower would spend on a repayment plan with fixed payments over a 12-month period. The payment is recalculated each year and is based on the borrower’s income, family size and amount of Direct Loans.

Income-Sensitive Repayment Plan

The borrower’s payments are based on their income, but the Federal Direct Grad PLUS Loan will be paid in full within 15 years.

How to Apply for Grad PLUS Loans

Applicants must apply for a Grad PLUS loan on the Federal Student Loans website. Borrowers must submit a Grad PLUS Loan application, also known as the Federal Application for Federal Student Aid (FAFSA). There is no GRAD PLUS Loan deadline, and borrowers may apply any time. The application collects all the information necessary to apply for the loan.

To begin the loan process, the borrower must log in using their Federal Student Aid ID (FSA ID). Individuals who do not have an FSA ID may create an account on the federal student aid website. When applying, borrowers must provide the following information:

  • School name.
  • Student’s name.
  • Borrower’s birthday.
  • Borrower’s social security number.
  • Borrower’s mailing address.
  • Borrower’s telephone number.
  • Borrower’s email address.
  • Borrower’s Income.
  • Employer name and address.

When applying for a Grad PLUS student loan, borrowers must also submit what is known as a Master Promissory Note (MPSN).

What is a Master Promissory Note (MPN) and why do I need one?

The MPSN outlines the terms of the Grad PLUS Loan. Anyone applying for a Grad PLUS loan must sign the form. Items disclosed in the MPSN are information about the interest rate, fees, late charges and collections, repayment terms and rules regarding default. Borrowers state that they have reviewed the form and that they understand the terms and conditions of the loan. When completing the form, the applicant must provide the following:

  • Borrower’s name
  • Borrower’s social security number
  • Borrower’s drivers license state and number
  • Borrower’s citizenship status

The form also requires borrowers to provide the names of two references whom they have known for at least 3 years.

Related Article: Direct Unsubsidized Loans

It might also interest you: