Graduate PLUS Loans: Your Comprehensive Guide

Diving into advanced education is an exciting chapter in anyone’s life. It’s a time of personal growth, career development, and pursuing passions. But the financial side of this journey can sometimes feel overwhelming. That’s where Direct PLUS or Grad PLUS Loans come in. These college loans are designed to support graduate and professional students pursuing higher education.  

In this guide, we’ll learn about Grad PLUS Loans and explore their features, benefits, and how they may fit into your financial strategy for an advanced degree. 

What is a Grad PLUS Loan?

A Grad PLUS Loan is a federal loan that can help cover some school costs for those pursuing advanced graduate degrees. What sets Grad PLUS Loans apart from other student loans is their ability to cover the total cost of attendance. Beyond just tuition, these loans can also apply to books, housing, and other education-related expenses, filling in the financial gaps where other types of aid may fall short. 

Graduate PLUS Loans are specifically available to graduate and professional students who have exhausted their eligibility for Direct Subsidized or Unsubsidized Loans. Grad PLUS loans are made available by the U.S. Department of Education and have a fixed interest rate that is set annually. Interest rates for Grad PLUS Loans may be higher than other federal student loans, so be sure to factor this in when planning repayment. 

Eligibility of Grad PLUS Loans

While Grad PLUS Loans offer valuable financial support for graduate and professional students, they are not available to just any student. To qualify for Grad PLUS Loans, you must meet certain criteria: 

• Enrollment Status: You must be a graduate or professional student enrolled at least half-time in a program leading to a graduate or professional degree or certificate at a school participating in the Direct Loan Program. 

• General Eligibility for Federal Student Aid: Like other federal student loans, you need to meet the general eligibility requirements for federal student aid. This includes being a U.S. citizen or eligible non-citizen, having a valid Social Security number, maintaining satisfactory academic progress, and not defaulting on federal student loans. 

• Satisfactory Credit History: Graduate PLUS Loans require a satisfactory credit history. While you are not required to meet a specific credit score threshold, having an adverse credit history may affect your eligibility. An adverse credit history means you’ve experienced certain negative credit events, such as bankruptcy, foreclosure, or defaulted loans. If you have an adverse credit history, you may still be eligible for a student loan with a cosigner. You may also be able to demonstrate extenuating circumstances. 

​​If you’re looking for a Ph.D. student loan or loan for your MBA, Grad PLUS Loans can be an option to cover the full cost of attendance for your graduate or professional studies. However, if you do not qualify for Grad PLUS loans or find that federal loans do not cover your full tuition expenses, you can consider private graduate student loans to help supplement this gap. ​​​​​ 

Key Features of a Grad PLUS Loan

Grad PLUS Loans are designed with the students’ best interests in mind, offering financial support and protections to make pursuing higher education more attainable and manageable. Before deciding, it’s essential to understand all aspects of these loans and consider how they align with your unique financial needs and academic goals. Here are several of the key features of these types of loans: 

​​​​​ Loan Limits

Grad PLUS Loans stand out for their flexible loan limits. Unlike other federal loans, which have set annual and lifetime limits, the Grad PLUS Loan is designed to cover the full cost of attendance. This means they can cover everything from tuition and books to housing and other education-related expenses, making them a particularly beneficial option for programs with high tuition costs. 

Interest Rates

Interest rates can make a big difference in the total cost of a loan. With Grad PLUS Loans, you don’t have to worry about fluctuating rates. Grad PLUS Loans offer fixed interest rates, which means the rate you get when you take out the loan won’t change over the life of the loan. The stability of the Grad PLUS loan can make it easier to plan for your loan repayment. 

Borrower Protections

Life can be unpredictable. Graduate PLUS Loans come with borrower protections, providing a safety net during challenging times. These protections include options for loan deferment, forbearance, and access to income-driven repayment plans. These options can provide much-needed flexibility when dealing with financial hardship or changes in income. 

Application and Repayment of Grad PLUS Loans

Applying for a Grad PLUS Loan is a straightforward process, like other types of Federal Aid: 

1. Complete the FAFSA: You can start the process by filling out the Free Application for Federal Student Aid (FAFSA). This form determines your eligibility for federal aid, including Grad PLUS Loans. 

2. Submit the Direct PLUS Loan Application: After completing the FAFSA, proceed to the Direct PLUS Loan Application. This application is specific to the Grad PLUS Loan and provides information about your school, desired loan amount, and authorizing a credit check. 

3. Credit Check and Eligibility: Unlike other federal loans, Grad PLUS Loans require a credit check to assess your creditworthiness. An adverse credit history may affect your eligibility, but you can still qualify by obtaining an endorser or documenting extenuating circumstances to the U.S. Department of Education. 

4. Loan Approval and Award Letter: Once approved for the Grad PLUS Loan, your school’s financial aid office will send you an award letter. This letter outlines the loan amount and provides instructions for accepting or declining the loan. 

Repayment of Grad PLUS Loans

As you progress through your academic journey, understanding the repayment process for Grad PLUS Loans is crucial for your financial success. Here’s a breakdown of key points to keep in mind: 

Grace Period: 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 have time to organize your finances and start earning an income before making payments. 

Interest during the Grace Period: It’s essential to be aware that interest continues to accrue on the loan during the grace period. If you defer payments, the accrued interest will be added to the loan balance (capitalized) when repayment begins. 

Repayment Options: During the grace period, you can make interest-only payments or defer your payments. Considering your financial situation and goals will help you decide on the best repayment option for your circumstances. 

Grad PLUS Loans Compared to Other Options

Grad PLUS Loans are a great resource, but they are just one of the financial aid options available. It’s important to consider all your options and choose the best fit for your needs. 

Federal Loan Options vs. Grad PLUS Loans

Federal loans, such as Direct Unsubsidized Loans and Direct Subsidized Loans, are often the first stop for many students. These loans typically offer lower interest rates than Grad PLUS Loans, which can result in lower overall costs. However, they also have lower loan limits, which may only cover part of the cost of attendance for some programs. This is where Grad PLUS Loans can step in to fill the gap. 

Private Student Loans vs. Grad PLUS Loans

Private student loans are another option to consider if you want to close the gap between your federal loan coverage and your tuition costs. ​​​​These loans can offer competitive interest rates (especially for borrowers with strong credit), flexible repayment terms, and additional benefits not offered with federal loans. At Ascent, we are proud to offer over 40 repayment options–more than any other lender–in addition to perks like 1% cash back at graduation, dedicated U.S.-based customer service, and access to career coaching resources and internship support.  

The Importance of Financial Literacy and Loan Repayment

Financial literacy plays a vital role in the lives of students taking on student loans. As you embark on your educational journey, it’s important to equip yourself with the knowledge and understanding of various financial concepts related to borrowing and repaying loans. Being financially literate means comprehending the terms and conditions of your loans, the impact of interest on your total repayment amount, and the array of repayment options available to you. 

Financial wellness is important to Ascent, which is why our borrowers have access to extensive financial literacy throughout their application and once they are a borrower, to ensure students (and cosigners) understand the responsibilities of borrowing money to pay for college. 

Learn More with Ascent

At Ascent, we are committed to helping students navigate the financial aspects of their educational journey. Whether you want to learn the basics of student loans or explore options for graduate student loans, we provide the necessary resources and support. 

Explore our financial wellness resources or contact us to learn more about Ascent’s graduate student loan options today.  

FAQ

How Much Can You Borrow with Grad PLUS?

One of the standout features of Grad PLUS Loans is their flexible loan limits. You can borrow up to the full cost of attendance minus any other financial aid received. This includes tuition, books, housing, and other education-related expenses. This flexibility can make Grad PLUS Loans a valuable resource for funding your education. 

What is the Difference Between a PLUS Loan and a Grad PLUS Loan?

While PLUS Loans and Grad PLUS Loans are part of the federal loan program, the main difference is who can borrow the money. PLUS Loans are available to parents of dependent undergraduate students, while Grad PLUS Loans are designed for graduate and professional students. 

Do Grad PLUS Loans Get Forgiven?

Yes, Grad PLUS Loans are eligible for certain forgiveness programs. For example, if you work in public service, you may be eligible for Public Service Loan Forgiveness. Grad PLUS Loans are also eligible for income-driven repayment plans, which cap your monthly payments at a percentage of your income and can lead to loan forgiveness after a certain period.