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Grad school  |  May 15, 2022  |  Ashley Boucher

What is a Graduate PLUS Loan?

What you'll learn

• What is a Graduate PLUS Loan, a type of federal student loan for graduate and professional students?
• How do you apply for a Federal Graduate PLUS Loan and what are the requirements for one?

The Graduate PLUS Loan, or Grad Plus loan, is a type of federal student loan or Direct PLUS Loan issued by the U.S. Department of Education. A Grad Plus loan is designed to help graduate students finance their education. This guide will walk you through whether you qualify for a Graduate PLUS Loan and how to get one.

Understanding Federal Direct Plus Loans for Graduate Students

So, what are Graduate PLUS Loans? Simply put, they’re federal student loans available to students attending graduate school and professional school.

Part of the federal Direct PLUS Loan program, a student would typically seek a Grad PLUS Loan after maxing out a federal Direct Unsubsidized Loan (a type of a federal student loan). The Direct Unsubsidized Loan limit is $20,500 per year, so if you’ve reached that limit and still need funds to cover the cost of grad school, the Graduate PLUS Loan may be a good student loan option for you. Private student loans, offered by banks, could be another option worth considering, especially if you have good credit.

Grad PLUS Loans come with a fixed interest rate and flexible loan limits. For loans first disbursed on or after July 1, 2022 and before July 1, 2023, the Grad PLUS loan interest rate is 7.54%.^{footnote 1}

The Graduate PLUS Loan does include an origination fee: this is a fee issued by the U.S. Department of Education to cover the cost of issuing your loan. In this case, the fee is 4.228% (for loans disbursed after October 1, 2021, and before October 1, 2022)^{footnote 2} and it’s deducted from the total loan amount before the money is sent to the school.

Requirements Necessary For Applying for Graduate PLUS Loans

If this sounds like a good fit to help finance your future, your next question may be ‘am I eligible for a Graduate PLUS loan?’

To apply for and receive a Graduate PLUS Loan, you must meet the following requirements:

• You’re a graduate or professional student enrolled at least half-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 (unless you meet certain additional eligibility requirements). 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 an endorser—but remember, the endorser is legally responsible for repaying your loan if you’re not able to do it.^{footnote 3}
• 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

Once you determine that you meet these criteria, it’s time to complete the FAFSA®. Completing the FAFSA^® isn’t just for high school seniors and undergraduates—grad students should file it, 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 for graduate students. The average Graduate PLUS Loan application 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 the Grad PLUS Loan, you’ll need to agree to the terms of the loan 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 – like scholarships, fellowships, grants, etc. There is no aggregate loan limit.

The cost of attendance includes

• 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. For example, Grad PLUS loans come with a fixed interest rate that won’t go up (or down) during the life of your loan.

In addition, loan payments can be postponed while you’re in school, as long as you’re enrolled at least half-time at an accredited program, and for an additional six months after you’ve left school or dropped below half-time status.

Graduate PLUS Loans have multiple repayment plans available, including income-driven repayment plans, and the interest you pay on your loan can be tax deductible.

Alternative options to pay for your graduate degree

When it comes to paying for grad school, federal student loans are a good resource. Before you take out student loans, though, explore money you don’t have to repay, like scholarships, grants, fellowships, and assistantships.

Use online tools, like the free Graduate School Scholarship Search, to connect you to scholarships specifically designed for grad students. After you’ve maximized money you don’t have to pay back and explored federal student loans, you still may need additional funds.

That’s when a private student loan may make sense. Most private student loans don’t have an origination fee, and some offer expanded repayment terms, so they could be a competitive option.

Whatever methods you choose to finance your graduate degree, you can rest assured you’re making a commitment and investment in your future.