Graduate PLUS loans: What are they and how to apply

Differences between a Grad PLUS loan and other federal student loans

There are several differences you should know about:

• A Grad PLUS Loan is credit-based. If your credit isn’t strong, you may need an endorser (similar to a cosigner) to help you qualify.
• Unlike other federal direct student loans, there’s no borrowing limit—it’s up to your grad school’s cost of attendance.
• The interest rate for a Grad PLUS Loan is higher than for a direct unsubsidized loan.

Tip: Always try federal direct loans first, then use Grad PLUS Loans (or a private loan) to cover the rest.

Requirements for Graduate PLUS Loans

Your next question may be “am I eligible for a Graduate PLUS Loan?”

Here are the requirements:

• You’re a graduate or professional student enrolled at least part-time at an eligible school in a program leading to a graduate or professional degree or certificate.
• You don’t have an “adverse credit history.” This means you have no student loan defaults, no long-term delinquencies, and no bankruptcies on your credit report..
  • If you do have a challenging credit history, consider applying with a cosigner—but remember, the endorser is legally responsible for repaying your loan if you’re not able to do it.^{footnote 5}

You meet the general eligibility requirements for federal student aid, including being a U.S. citizen or eligible non-citizen, having a Social Security number, and making satisfactory academic progress.

How to apply for a Grad PLUS Loan

If you meet those requirements, the next step is to complete the Free Application for Federal Student Aid (FAFSA®). Submitting the FAFSA® isn’t just for high school seniors and undergraduates—grad students should file too in order to qualify for various forms of aid, including scholarships and grants, work-study, and federal student loans.

Once you’ve filed the FAFSA®, you can start a Grad PLUS Loan application. It takes about 20 minutes, and you’ll need to provide your verified FSA ID (which is a username and password created to file the FAFSA®), your school name, your permanent mailing address, your U.S. address (if your permanent address is outside of the U.S.), your telephone number and email address, and if applicable, your employer's information.

If you’re eligible for a Grad PLUS Loan, you’ll need to agree to its terms by signing a Master Promissory Note. You may also need to complete entrance counseling.

What does a Graduate PLUS Loan cover?

The Graduate PLUS Loan can cover the full cost of attendance for your graduate program, with the exception of other financial aid received. There is no aggregate (overall) loan limit.

The cost of attendance may include:

• Tuition and fees
• Room and board
• Books and supplies
• Technology and equipment
• Transportation
• Miscellaneous and personal expenses

Key benefits of the Grad PLUS Loan

There are benefits to a Graduate PLUS Loan, similar to benefits offered for other federal student loans.

• Grad PLUS loans come with a fixed interest rate that won’t go up (or down) during the life of your loan.
• Loan payments can be postponed while you’re in school, as long as you’re enrolled at least part-time at an accredited program, and for an additional six months after you’ve left school or dropped below part-time status.
• There are multiple repayment plans available, including income-driven repayment plans, and the interest you pay on your loan can be tax deductible.

More options to pay for your graduate degree

After you’ve maximized money you don’t have to pay back, like scholarships, and explored direct federal student loans, you may still need additional funds.

That’s when you should consider a Graduate PLUS Loan. Another option may be a private student loan. Both are credit based, but most private student loans don’t have an origination fee. Interest rates could be competitive and there may also be expanded repayment terms.