Apply for a Graduate PLUS Loan (Complete Guide)

If you’re considering pursuing higher education and need financial assistance, the Graduate PLUS Loan is an excellent option to explore. Designed specifically for graduate and professional students, the Graduate PLUS Loan provides a valuable source of funding to cover educational expenses beyond what is offered through other federal student aid programs. In this comprehensive guide, we will delve into everything you need to know about the Graduate PLUS Loan, from its features and benefits to the application process and repayment options.

What is a Graduate PLUS Loan?

The Graduate PLUS Loan, also known as the Grad PLUS Loan, is a federal loan program offered by the U.S. Department of Education to graduate and professional students. It is a type of Direct PLUS Loan, which means that the funds come directly from the federal government and not from a private lender. Grad PLUS Loan is designed to help cover the cost of education, including tuition, fees, books, and other educational expenses.

Eligibility for Graduate PLUS Loan

Eligibility for the Graduate PLUS Loan is primarily based on your enrollment status and meeting general federal student aid requirements. Here’s a closer look at the key eligibility criteria:

Enrollment in a Graduate or Professional Degree Program:

To qualify for the Graduate PLUS Loan, you must be enrolled at least half-time in a graduate or professional degree program at an eligible educational institution. Eligible programs typically include advanced degrees such as master’s, doctoral, or professional degrees like law, medicine, dentistry, or veterinary medicine.

Follow the General Federal Student Aid Requirements:

In addition to your enrollment status, you must meet the general eligibility criteria for federal student aid. These criteria include:

a. Citizenship or Eligible Non-Citizenship: You must be a U.S. citizen or an eligible non-citizen to qualify for federal student aid, including the Graduate PLUS Loan. Eligible non-citizens may include permanent residents, refugees, or individuals granted asylum.

b. Satisfactory Academic Progress: To receive federal student aid, including the Graduate PLUS Loan, you must maintain satisfactory academic progress (SAP) as defined by your educational institution. SAP typically involves meeting specific GPA requirements and making adequate progress toward completing your degree within a reasonable timeframe.

c. No Previous Federal Loan Defaults: You must not be in default on any previous federal student loans. If you have defaulted on a federal loan in the past, you may need to resolve the default before being eligible for the Graduate PLUS Loan.

It’s important to note that while a credit check is required for the Grad PLUS Loan, the loan does not have a strict credit score requirement. Unlike private loans, which may heavily rely on credit history, the federal government takes into account adverse credit history but considers other factors like employment and income when evaluating your creditworthiness.

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Complete Additional Steps:

Applying for the Graduate PLUS Loan involves submitting the Free Application for Federal Student Aid (FAFSA) and completing the additional steps specific to the loan application. The loan amount you can receive is typically determined by your school’s financial aid office, taking into consideration your cost of attendance and other financial aid you may already be receiving.

Overall, the Grad PLUS Loan is an essential resource for graduate and professional students seeking financial support to pursue advanced degrees. By meeting the eligibility criteria and fulfilling the necessary application requirements, you can access valuable funding to help achieve your educational goals and advance your career prospects.

Direct Plus Loan Application Process

The application process for the Graduate PLUS Loan involves a few essential steps to ensure a smooth and successful application:

Complete the FAFSA:

The first step in applying for the Graduate PLUS Loan is to complete the Free Application for Federal Student Aid (FAFSA). The FAFSA is a comprehensive form that assesses your financial need and determines your eligibility for various federal student aid programs, including the Graduate PLUS Loan. Be sure to provide accurate and up-to-date information to ensure an accurate assessment of your financial need.

Gather Required Information:

Before starting the application process, gather all the necessary information, including your Social Security number, driver’s license, and income tax returns. You may also need information about your school’s cost of attendance and other financial aid you are receiving.

Apply through Direct Loan Program or School:

After submitting your FAFSA, you can apply for the Graduate PLUS Loan through the Direct Loan Program website, also known as StudentLoans.gov. Alternatively, you can apply through your school’s financial aid office. Some schools may have specific application procedures, so it’s best to check with your school’s financial aid office for guidance.

Entrance Counseling:

As part of the application process, you may be required to complete an entrance counseling session. This counseling provides important information about your rights and responsibilities as a loan borrower, including repayment options and loan terms. Entrance counseling ensures that you fully understand the implications of borrowing a Graduate PLUS Loan.

Sign the Master Promissory Note (MPN):

To formalize your loan agreement, you must sign a Master Promissory Note (MPN). The MPN is a legal document that outlines the terms and conditions of the loan, including the amount borrowed, interest rate, and repayment schedule. By signing the MPN, you commit to repaying the loan according to the agreed-upon terms.

Loan Approval and Disbursement:

Once your Graduate PLUS Loan application is approved, you will receive a notification from the Direct Loan Program or your school’s financial aid office. The loan amount will be disbursed directly to your school, typically in two equal installments for each academic year.

Repayment:

Keep in mind that the Graduate PLUS Loan is a loan that must be repaid. After completing your degree program or if you drop below half-time enrollment, you will enter a grace period before the repayment begins. During this grace period, you have time to prepare for repayment and explore various repayment plans offered by the Department of Education.

By following these steps and completing the required paperwork, you can successfully apply for the Graduate PLUS Loan and access the financial support needed to pursue your graduate or professional studies. Remember to stay informed about the loan’s terms and your obligations as a borrower to make responsible financial decisions during your academic journey.

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Interest Rates and Fees

Interest rates and fees are significant considerations when taking out a Graduate PLUS Loan. Here’s what you need to know:

Interest Rates:

Graduate PLUS Loans typically come with fixed interest rates, meaning the rate remains the same throughout the life of the loan. The interest rates for these loans are determined annually and may vary from one academic year to another. It’s crucial to check the current interest rate at the time of your loan application, as it will impact the total amount you repay over the loan term.

As of the date of publication of this post and the last update, the interest rates for Direct PLUS Loans (Disbursed on or After July 1, 2023, and Before July 1, 2024) were set at 7.05% (for Direct Unsubsidized Loans) and 8.05% (for Direct PLUS Loans). However, rates may change overtime, so it’s essential to consult the U.S. Department of Education or your school’s financial aid office for the most up-to-date information.

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Origination Fees:

In addition to the interest rate, Graduate PLUS Loans may have an origination fee. The origination fee is a percentage of the total loan amount and is deducted from the loan before the funds are disbursed to your school. For example, if you borrow $10,000 with a 4% origination fee, you will receive $9,600 in disbursements, and the $400 origination fee will be paid upfront.

For the 2023-2024 academic year, the origination fee for Direct PLUS Loans was set at 4.228%. As with interest rates, origination fees may change annually, so it’s crucial to verify the current fee with the relevant authorities.

Repayment Considerations:

When considering a Graduate PLUS Loan, it’s essential to understand the repayment terms and options. After you graduate, leave school, or drop below half-time enrollment, you will enter a grace period, which typically lasts six months. During this grace period, you are not required to make loan payments. However, interest continues to accrue, and if you don’t make interest payments during the grace period, it will capitalize and be added to the principal balance when repayment begins.

Once the grace period ends, you will enter the repayment phase. The standard repayment plan for Graduate PLUS Loans is a fixed monthly payment over ten years. However, you may be eligible for various income-driven repayment plans, which adjust your monthly payment based on your income and family size. These plans can be helpful if you anticipate challenges in meeting the standard repayment amount.

Overall, understanding the interest rates, fees, and repayment options of Graduate PLUS Loans is crucial to making informed financial decisions. It’s advisable to research thoroughly, explore other federal loan options, and consult your school’s financial aid office to determine the best financing strategy for your graduate studies.

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Repayment Options

When it comes to repaying your Graduate PLUS Loan, you have several options to choose from, allowing you to find a plan that best fits your financial circumstances:

Standard Repayment Plan:

The standard repayment plan is the default option for Graduate PLUS Loans. Under this plan, you make fixed monthly payments over ten years. This option offers the advantage of paying off your loan in a relatively short time, but it might result in higher monthly payments compared to other plans.

Income-Driven Repayment Plans:

Income-driven repayment plans are designed to adjust your monthly payment based on your income and family size. These plans can be especially beneficial if you have a lower income or are facing financial hardship. The four primary income-driven repayment plans are:

• • Income-Based Repayment (IBR)
  • Pay As You Earn (PAYE)
  • Revised Pay As You Earn (REPAYE)
  • Income-Contingent Repayment (ICR)

With income-driven plans, your monthly payments are capped at a percentage of your discretionary income. Depending on your income and family size, you may even qualify for $0 payments, and any remaining balance after a certain number of years of qualifying payments can be forgiven.

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Extended Repayment:

The extended repayment plan extends your loan term to up to 25 years. This can reduce your monthly payments by spreading them out over a longer period. However, keep in mind that a longer loan term may result in paying more interest over time.

Graduated Repayment:

Graduated repayment allows you to start with lower monthly payments that gradually increase over time, typically every two years. This plan is beneficial if you expect your income to rise in the future, as it gives you time to adjust to higher payments as your career progresses.

Choosing the right repayment plan depends on your current financial situation, career prospects, and long-term goals. Before making a decision, consider factors like your income, family size, other debts, and potential future earnings. It’s essential to review the details of each plan and use online repayment calculators to estimate the total amount you’ll pay over the loan term.

If you’re uncertain about which repayment option is best for you, don’t hesitate to contact your loan servicer or a financial aid counselor for guidance. Remember that you can switch between repayment plans if your circumstances change, so staying informed and exploring the available options can help you manage your Graduate PLUS Loan responsibly and achieve your financial goals after completing your graduate studies.

Frequently Asked Questions About Graduate PLUS Loan

What is a Graduate PLUS Loan?

A Graduate PLUS Loan is a federal student loan program that allows graduate and professional degree students to borrow funds to cover the cost of their education. It is an option for students who need additional financial aid beyond what is available through other federal student loan programs.

How do I apply for a Graduate PLUS Loan?

To apply for a Graduate PLUS Loan, you must first complete the Free Application for Federal Student Aid (FAFSA). Once you have done that, you can apply for the loan through the Direct Loan Program website or through your school’s financial aid office. During the application process, you may need to complete an entrance counseling session and sign a Master Promissory Note (MPN).

What are the eligibility requirements for a Graduate PLUS Loan?

To be eligible for a Graduate PLUS Loan, you must be enrolled in a graduate or professional degree program at an eligible educational institution. You must also meet the general eligibility criteria for federal student aid, which includes being a U.S. citizen or eligible non-citizen, maintaining satisfactory academic progress, and not being in default on any previous federal student loans.

What is the interest rate on Graduate PLUS Loans?

The interest rates for Graduate PLUS Loans are typically fixed and may vary from year to year. It’s essential to check the current interest rate at the time of your application.

When do I need to start repaying my Graduate PLUS Loan?

Repayment for Graduate PLUS Loans typically begins six months after you graduate, leave school, or drop below half-time enrollment. During this grace period, you are not required to make payments.

Are there different repayment options for Graduate PLUS Loans?

Yes, there are several repayment options available for Graduate PLUS Loans. The standard repayment plan requires fixed monthly payments over ten years. Additionally, there are income-driven repayment plans, extended repayment, and graduated repayment options that provide flexibility based on your financial situation.

Can I switch repayment plans if my circumstances change?

Yes, you can switch between repayment plans if your circumstances change. If you find that your current plan is no longer suitable, you can contact your loan servicer to explore other options that better align with your financial situation.

Are there any loan forgiveness options for Graduate PLUS Loans?

Graduate PLUS Loans are not eligible for some federal loan forgiveness programs, such as Public Service Loan Forgiveness. However, if you are on an income-driven repayment plan, any remaining balance after a certain number of years of qualifying payments may be eligible for forgiveness.

Can I borrow more than the cost of tuition with a Graduate PLUS Loan?

Yes, Graduate PLUS Loans can cover the cost of attendance, which includes not only tuition but also other education-related expenses like books, housing, and transportation.

Can international students apply for Graduate PLUS Loans?

No, Graduate PLUS Loans are available only to U.S. citizens or eligible non-citizens. International students are not eligible for federal student aid programs and must explore other funding options

Conclusion

The Graduate PLUS Loan is a valuable financial tool that can help you pursue your academic dreams without the burden of immediate financial constraints. By understanding its features, eligibility requirements, application process, and repayment options, you can make informed decisions about financing your graduate or professional education. Remember to explore all federal student aid options and consider consulting your school’s financial aid office for personalized guidance. With careful planning, you can make the most of the Graduate PLUS Loan and focus on achieving your academic and career goals.