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Going to grad school can have a big impact on your earning potential — but it can also be costly. One way to cover the expense is to take out Grad PLUS Loans. Grad PLUS Loans are a form of federal student loans designed for eligible graduate or professional degree students attending a university that is part of the Direct Loan program.

If you’re considering this option, here’s what you need to know about Grad PLUS Loans.

In this post:

How to apply for Grad PLUS Loans

To qualify for a Grad PLUS Loan, you must first complete the Free Application for Federal Student Aid (FAFSA). Once that’s finished, you can move forward with the loan process:

  1. Contact your school’s financial aid office: Most universities require students to apply for Grad PLUS Loans online at StudentLoans.gov. However, some schools have different procedures in place. Before submitting your application, contact your school’s financial aid office to ask about their process.
  2. Complete your application: The application process at StudentLoans.gov takes about 20 minutes to complete. You’ll need to provide your verified Federal Student Aid (FSA) ID, chosen school name, personal information, and employer information. Grad PLUS Loans do require a credit check; if you have placed a credit freeze on your credit report, you’ll have to lift the freeze before you can submit your application.
  3. Sign a Master Promissory Note: If you are eligible for a Grad PLUS Loan, you have to sign a Direct PLUS Loan Master Promissory Note agreeing to the repayment terms of the loan. If you haven’t take out a PLUS loan previously, you’ll also have to complete entrance counseling. Your school’s financial aid office will provide you with instructions on how to complete the counseling requirement.

Grad PLUS Loan interest rates and fees

Grad PLUS Loans have the highest interest rate of any federal loan. For loans disbursed on or after July 1, 2019, and before July 1, 2020, the interest rate is 7.08%. Grad PLUS Loans have fixed interest rates, meaning the rate stays the same for the length of your repayment term.

They also have a disbursement fee. It’s a percentage of your loan amount, and it’s proportionally deducted from your loan when its disbursed. Loans disbursed on or after October 1, 2019, and before October 1, 2020, have a disbursement fee of 4.236%.

 Grad PLUS LoansDirect Unsubsidized Loans
Interest rate7.08%6.08%
Disbursement fee4.236%1.059%
Annual borrowing limitCost of attendance minus any other financial aid received$20,500 (or $40,500 for medical students)

How Grad PLUS Loans are funded

If approved for a loan, your selected university will first apply the loan amount to your school account to cover the cost of tuition, fees, and room and board. If there is any money left over after paying for those charges, the remaining balance will be issued to you to cover your other education expenses, such as textbooks.

Grad PLUS Loan maximums

Unlike some other forms of federal loans, Grad PLUS Loans don’t have a limit on how much you can borrow. The maximum you can take out is the total cost of attendance minus any other financial assistance you receive.

Grad PLUS Loan repayment options

With Grad PLUS Loans, you don’t have to start making payments on your loans until six months after you graduate, leave school, or drop below half-time status.

Once that time period is up, you’re immediately entered into a Standard Repayment Plan, where your payments are spread evenly over the course of ten years.

When you’re just starting out, your payments under a Standard Repayment Plan may be more than you can afford. If that’s the case, Grad PLUS Loans are eligible for some alternative payment plans.

  • Graduated Repayment Plan: Under this plan, your payments start out low and increase every two years. Your loan will be paid off within 10 years.
  • Extended Repayment Plan: With an Extended Repayment Plan, your repayment term is extended to 25 years. Your payments may be fixed or graduated, but are much lower than they’d be under a 10-year plan.
  • Income-driven repayment plans: There are four different types of income-driven repayment plans (IDR). Under these plans, your repayment term is extended to 20 to 25 years, and your monthly payment is capped at a percentage of your discretionary income. If there is still a remaining balance after your repayment term ends, the balance is forgiven.

Paying for graduate school

If you’re considering going to graduate school or pursuing a professional degree, Grad PLUS Loans are just one financing option available. Because they have such high interest rates, you may be better off exploring other loan options.

For example, you may be able to find a private loan for graduate school that offers lower interest rates and more favorable repayment terms, helping you save money. You can check out some of the best private student loan lenders to explore your options.

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About the author
Kat Tretina
Kat Tretina

Kat Tretina is an authority on student loans and a contributor to Credible. Her work has appeared in publications like the Huffington Post, Money Magazine, MarketWatch, Business Insider, and more.

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