Grad PLUS Loans: A Comprehensive Guide to Financial Aid for Graduate Studies

Grad PLUS Loans

Introduction to Grad PLUS Loans

What Are Grad PLUS Loans?

Grad PLUS Loans are federal loans designed specifically for graduate and professional students. They are meant to supplement other financial aid options and can cover tuition, room, board, and other education-related expenses.

Who is Eligible for a Grad PLUS Loan?

Eligibility is pretty straightforward. You need to be a U.S. citizen or eligible non-citizen enrolled at least half-time in a graduate or professional program. But remember, it’s not free money; you have to pay it back with interest.

Advantages and Disadvantages

Pros of Grad PLUS Loans

  1. Higher Borrowing Limits: You can borrow up to the total cost of your education.
  2. Flexible Repayment Options: Various plans are available, from income-driven plans to loan forgiveness.

Cons of Grad PLUS Loans

  1. Higher Interest Rates: Generally, they come with higher rates compared to other federal loans.
  2. Credit Check Required: A not-so-great credit history can be a roadblock.

Applying for a Grad PLUS Loan

Required Documentation

Ensure you have your FAFSA form filled out and your credit history available. You’ll also need proof of enrollment in a graduate program.

Application Process

The application can be filled out online or through your financial aid office. After submitting the FAFSA, you’ll complete the PLUS application and Master Promissory Note (MPN).

Credit Check

Your credit history will be reviewed. Don’t worry; the standards aren’t as strict as with private loans.

Certainly, when it comes to applying for a Grad PLUS Loan, a credit check is a mandatory step in the process. Unlike some federal student loans that don’t require a credit check, Grad PLUS Loans do scrutinize your credit history. While the criteria aren’t as stringent as those for private loans, having an adverse credit history can pose a hurdle. If your credit history isn’t up to par, you may still qualify by obtaining an endorser or by meeting certain extenuating circumstances. It’s advisable to review your credit report beforehand to address any issues that might affect your eligibility.

Interest Rates and Fees

Interest rates and fees are crucial considerations when opting for a Grad PLUS Loan. These loans typically have a fixed interest rate, which is usually higher compared to other types of federal loans like Stafford Loans. In addition to interest rates, there are also origination fees that are deducted directly from the loan disbursement. This means the actual amount you receive will be less than what you initially borrowed. Understanding these costs is vital for budgeting and planning your repayment strategy effectively.

Understanding Interest Rates

The rates are fixed but tend to be higher than undergrad loans. Keep this in mind when planning your financial future.

Understanding the interest rates on a Grad PLUS Loan is essential for financial planning during and after your academic journey. The interest rates are fixed, which means they won’t fluctuate over the life of the loan. However, these rates are usually set higher than other federal student loans, making Grad PLUS Loans more expensive in the long run. The interest starts accruing from the moment the loan is disbursed, even if you’re still in school or in a deferment period. Therefore, it’s crucial to factor in the accumulating interest when calculating your future monthly payments. Having a clear grasp of how interest rates work can help you make an informed decision and possibly save you money over time.

Associated Fees

There are origination fees, which get deducted from each disbursement, reducing the net amount you receive.

Associated fees are another important factor to consider when taking out a Grad PLUS Loan. One of the primary fees you’ll encounter is the origination fee. This is a one-time charge that is calculated as a percentage of the total loan amount. The origination fee is deducted directly from each loan disbursement, meaning you’ll actually receive less money than you initially borrowed. Because of this, you may need to request a higher loan amount to receive the net amount you need for your educational expenses. Being aware of these fees is crucial for effective budgeting and to avoid any surprises when your loan is disbursed.

Repayment Plans

Repayment plans for Grad PLUS Loans offer a variety of options to suit different financial situations. The Standard Repayment Plan usually involves fixed monthly payments over a 10-year period. Alternatively, Income-Driven Repayment Plans adjust your monthly payments based on your income and family size, offering more flexibility. Some plans even offer loan forgiveness options after a set number of payments. Choosing the right repayment plan is crucial for managing your debt efficiently and minimizing financial strain.

Standard Repayment Plan

This is a 10-year plan with fixed monthly payments. Simple, but not always the most flexible.

The Standard Repayment Plan is the most straightforward option for Grad PLUS Loans, consisting of fixed monthly payments over a 10-year period. This plan is simple but may require higher monthly payments compared to other plans. One benefit of the Standard Repayment Plan is that you’ll likely pay less interest over the life of the loan since it’s a shorter term. However, this plan may not be ideal for those who require lower monthly payments due to financial constraints. Make sure to evaluate if this plan aligns with your budget before committing.

Income-Driven Repayment Plans

These plans base your monthly payments on your income and family size. A lifesaver for some!

Income-Driven Repayment Plans offer a flexible approach to managing your Grad PLUS Loans, as they adjust your monthly payments based on your income and family size. These plans are especially helpful if you’re facing financial uncertainty or have inconsistent income. Under these plans, any remaining balance may be forgiven after 20 to 25 years of payments, depending on the specific plan you choose. However, be aware that you may end up paying more in interest over the life of the loan. Opting for an income-driven plan can provide financial relief but requires annual documentation to adjust your payment amounts.

Loan Forgiveness Options

Public Service Loan Forgiveness (PSLF) is available if you work in certain sectors.

Loan forgiveness options can be a significant benefit for those with Grad PLUS Loans, especially if you work in public service fields. The Public Service Loan Forgiveness (PSLF) program, for instance, forgives the remaining loan balance after 120 qualifying monthly payments while working full-time for a qualifying employer. Other forgiveness options may be available based on your profession, such as teaching or healthcare. However, strict criteria and documentation are usually required to qualify for these programs. Exploring these options early on can significantly impact your long-term financial planning.

Alternatives to Grad PLUS Loans

Federal Loans

Stafford Loans are generally cheaper but offer lower borrowing limits.

Federal loans, such as Stafford Loans, are often the first option students consider before exploring Grad PLUS Loans. They generally come with lower interest rates and more lenient credit requirements, making them a more cost-effective choice for many. However, federal loans have lower borrowing limits, which may not cover the entire cost of graduate-level education, including tuition and living expenses. They also offer a range of repayment plans and potential loan forgiveness options similar to Grad PLUS Loans. Before opting for a Grad PLUS Loan, it’s advisable to max out your eligibility for other federal loans first.

Private Loans

These can be more expensive but may offer perks like no origination fees.

Private loans are another alternative to Grad PLUS Loans and are sourced from banks, credit unions, or online lenders rather than the federal government. While they can offer some perks, such as no origination fees or variable interest rates, they often require a strong credit history or a cosigner. Private loans usually don’t offer as many flexible repayment options or loan forgiveness programs as federal loans do. Additionally, interest rates can be variable, potentially increasing over time. It’s essential to read the fine print and understand the terms before opting for a private student loan.


Grad PLUS Loans are a viable option for many, but they come with their set of pros and cons. Weigh these carefully to make the best choice for your educational journey.


  1. What credit score do I need for a Grad PLUS Loan?
    • No specific score, but adverse credit history can disqualify you.
  2. Can I defer payments while in school?
    • Yes, with some conditions.
  3. Is cosigner required for a Grad PLUS Loan?
    • No, unless you have adverse credit history.
  4. How much can I borrow with a Grad PLUS Loan?
    • Up to the total cost of your education, including living expenses.
  5. Can a Grad PLUS Loan be forgiven?
    • Yes, under specific conditions like PSLF.

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