If you’re planning to attend a graduate program, a graduate PLUS loan could help you cover the cost. Grad PLUS loans are specifically designed for graduate and professional students, and could cover up to your school’s total cost of attendance, with a few caveats.
Here’s what you should know before taking out a grad PLUS loan.
What is a grad PLUS loan?
Graduate PLUS loans are a type of Direct PLUS Loan available to graduate and professional students. These loans typically have higher interest rates compared to other types of federal debt, such as Direct Subsidized and Unsubsidized Loans. They also come with a loan disbursement fee that’s deducted from the total amount borrowed.
- Who qualifies: Eligible graduate and professional students
- 2023-24 interest rate: 8.05%
- 2023-24 loan disbursement fee: 4.228% of the loan amount
- Borrowing limits: Up to the school’s cost of attendance (minus any other financial aid you receive)
- Repayment timeline: 10 to 25 years, depending on your repayment plan
- How to apply: Complete the Free Application for Federal Student Aid (FAFSA) and Direct PLUS Loan Application
If you take out grad PLUS loans, you won’t have to start making payments until six months after you graduate, leave school, or drop below half-time enrollment status.
However, interest will begin to accrue on the loan as soon as the money is disbursed. You can choose to pay the accrued interest or allow it to capitalize, meaning it can be added to your total loan balance.
Pros and cons of grad PLUS loans
When considering graduate PLUS loans, it's important to weigh the pros and cons. Here's a quick look at the advantages and disadvantages of grad PLUS loans:
| |
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Generous borrowing limits (can cover full cost of attendance) | You need a relatively good credit score to qualify. |
| The government charges a loan origination fee. |
You can defer payments until six months after you leave school or drop below half-time enrollment. | Interest accrues while you’re in school and during your six-month grace period. |
Eligible regardless of financial need | Higher interest than other federal loans |
Who qualifies
To qualify for a grad PLUS loan, you must meet certain eligibility requirements, including:
- You must be a U.S. citizen or an eligible noncitizen, such as a permanent resident.
- You must be a graduate or professional student enrolled at least half-time at an eligible school.
- You must be enrolled in a program leading to a graduate degree or certificate.
- You must not have an adverse credit history.
You don’t need to demonstrate financial need to be eligible for a grad PLUS loan, but lenders will check to make sure you don’t have an adverse credit history. If you have things like bankruptcy, late payments, or defaulted loans on your credit report, you may not qualify for a grad PLUS loan.
However, adding an endorser to your application (similar to a cosigner) could help you get approved.
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Note:
Graduate students may also apply for a Direct Unsubsidized Loan, which doesn’t require a credit check.
Check Out: Can You Get a Student Loan With Bad Credit?
Borrowing limits
Unlike other types of federal student loans, grad PLUS loans don’t have a specific limit on how much you can borrow per year, nor do they have an aggregate limit. Instead, you might be able to borrow up to your school’s certified cost of attendance, minus other financial aid you’ve received.
If you have more expenses that a grad PLUS loan doesn’t cover, you could also consider taking out private student loans to fill in the gaps. If you decide to take out a private student loan, be sure to consider as many lenders as possible to find the right private student loan for you.
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What it covers
In addition to covering the cost of tuition and school supplies (like books, pens, and notebooks), you can use Direct PLUS Loan funds to cover other living expenses, like housing, transportation, and even child care. Additionally, you can use the funds to pay for costs associated with a disability, like computer programs, tape recorders, and assistive listening devices.
Here’s a list of what grad PLUS loans can be used for:
- Tuition and fees
- Room and board
- Textbooks
- Supplies
- Child care
- Transportation
- Cost related to a disability
- Costs for eligible study-abroad programs
You can also use loan funds to pay for meal plans, food, bus passes, and parking passes. All living expenses, including medical necessities, toiletries, utilities, and household expenses, are eligible costs.
You can’t use student loan funds to purchase a vehicle (even if used to commute to school), pay off other debt, or pay for business expenses.
How to apply
To apply for grad PLUS loans, you must complete the Free Application for Federal Student Aid (FAFSA), as well as a separate Direct PLUS Loan Application. You’ll also have to undergo a credit check.
Here are the steps to follow:
- Fill out the FAFSA: Your first step in paying for grad school should be registering for the FAFSA. Your school will use your FAFSA results to determine what federal financial aid you qualify for.
- Apply for scholarships and grants: Unlike student loans, college scholarships and grants don’t have to be repaid — which makes them a great way to pay for school. You might also be eligible for school-based scholarships, depending on your FAFSA results.
- Apply for a Direct PLUS Loan online: Use the Direct PLUS Loan Application to apply for a graduate PLUS loan. A credit check will be conducted, and your information will be sent to the school you select, which will determine your eligibility for the loan.
Check Out: How To Take Out a Student Loan
Grad PLUS loan alternatives
In some cases, taking out private graduate student loans could be a better choice than grad PLUS loans. Here are a few situations when this might make sense:
- You have good-to-excellent credit: If you have good credit, meaning a FICO score of 670 or higher, you might qualify for a lower interest rate on a private student loan compared to a Direct PLUS Loan. Having a lower rate could help you save money on interest charges over the life of your loan.
- You want a longer repayment term: The standard loan term on grad PLUS loans is 10 years — though you could potentially extend your repayment term by signing up for another repayment plan or by consolidating with a Direct Consolidation Loan. But if you’d like to start with a longer term right off the bat, you might be able to get a term up to 20 years through a private lender. This could be helpful for longer or more expensive programs, such as law school or medical school.
- You don’t want to pay disbursement fees: Grad PLUS loans charge some hefty disbursement fees. Private student loans, on the other hand, generally don’t come with disbursement fees, which could save you money.
If you decide to get a private student loan to pay for college, remember to consider as many lenders as you can to find the right loan for you.
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Ascent offers several unique borrowing options that you don’t typically see with private lenders. In addition to traditional student loans for undergraduate, graduate, and medical programs, college juniors and seniors may qualify for its Outcomes-Based Loan — which doesn’t require established credit or a cosigner. Instead, Ascent reviews alternate factors such as your school, major, and GPA to determine your eligibility.
Ascent also offers a wide range of loan terms and repayment plans to choose from. You may even qualify for its Progressive Repayment plan, which allows you to start with small payments that gradually increase over time. Borrowers who use a cosigner can release them after as few as 12 payments, though international students don’t qualify for this option.
Loan terms
5, 7, 10, 12, 15, or 20 years
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$2,001 minimum up to your school’s annual cost of attendance; lifetime limits of $200,000 for undergrads and $400,000 for graduates
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Must be a U.S. citizen or DACA student enrolled at least half time at an eligible institution. International students with a qualified cosigner may also qualify. Applicants who can’t meet financial, credit, or other requirements may qualify with a cosigner.
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$1,000 up to 100% of the school-certified cost of attendance
Overview
College Ave offers a wide range of in-school loans for nearly every type of degree. There are a number of repayment options, and borrowers can choose a unique eight-year repayment term. Plus, graduate, dental, and medical students receive extended grace periods.
You may get easy funding for multiple years — 90% of undergraduates are approved for additional student loans when they apply with a cosigner. However, it can be difficult to remove a cosigner for your loan later on, as you must complete at least half of your repayment term before becoming eligible. That’s significantly longer than some lenders, which may only require one to two years of payments before releasing a cosigner.
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5, 8, 10, or 15 years for most borrowers (law, dental, medical, and other health profession students have up to 20 years)
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$1,000 minimum up to your school’s annual cost of attendance; lifetime limits depend on your degree and credit profile
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Available after more than half of the scheduled repayment period has elapsed and other requirements are met
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Must be a U.S. citizen or permanent resident at an eligible institution. International students with a Social Security number and a qualified cosigner may also qualify. Applicants who can’t meet financial, credit, or other requirements may qualify with a cosigner.
Read full reviewLoan Amounts
$1,000 up to 100% of school-certified cost of attendance
Overview
Sallie Mae offers the Smart Option Student Loan for undergraduate students and a suite of loans for graduate students. You can borrow up to your school-certified cost of attendance and apply just once annually to get the funds you need for the entire academic year. Plus, applying for a Smart Option Student Loan with a cosigner may help you get a better rate.
Through Sallie Mae, you can find a variety of loans designed for specific needs, including loans for MBA programs, law school, medical school, and health profession programs.
Loan terms
10 to 15 years for the Smart Option Student Loan; 15 years for law school, MBA, and graduate school loans; 20 years for medical school loans
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$1,000 up to school-certified cost of attendance. Student must be listed as the borrower, and a parent may cosign.
Cosigner release
After you graduate, make 12 one-time principal and interest payments, and meet certain credit requirements
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Must be a U.S. citizen or permanent resident enrolled in an eligible program. Noncitizens residing and attending school in the U.S. may qualify by applying with a creditworthy cosigner, who must be a U.S. citizen or permanent resident, and providing an unexpired government-issued photo ID.
Read full reviewLoan Amounts
$1,000 to $99,999 annually ($180,000 aggregate limit)
Overview
Powered by Cognition Financial, Custom Choice offers student loans for undergraduate and graduate students starting at $1,000. You can borrow up to $99,999 per year with a total aggregate limit of $180,000.
If you apply with a cosigner, you may be able to release them from your loan after 36 on-time payments. You can also receive a 0.25 percentage point discount on your interest rate by setting up autopay, as well as a 2% reduction of your principal balance after graduating.
Custom Choice doesn’t charge application, origination, prepayment, or late fees. It also lets you pause payments through forbearance if you qualify for its natural disaster or unemployment protection programs.
Loan amounts
$1,000 to $99,999 per year (lifetime limit of $180,000)
Eligibility
Must be a U.S. citizen or permanent resident at an eligible institution. You must also meet Custom Choice’s underwriting criteria for income and credit, or apply with a cosigner who does. Eligible noncitizens such as DACA residents can also qualify by applying with a cosigner who’s a U.S. citizen or permanent resident.
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$1,000 to $350,000 (depending on degree)
Overview
Citizens offers a variety of student loan types, including loans for undergraduates, graduate students, and parents. Perhaps the most unique feature of Citizens student loans is the option for multiyear approval. If you qualify, you can apply once and borrow for future years with a more streamlined process that only involves a soft credit inquiry.
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Loan terms
5, 10, or 15 years for student loans; 5 or 10 years for parent loans
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$1,000 minimum, up to a maximum of $150,000 for undergraduate and graduate degrees; $250,000 for MBA and law; and $180,000 or $350,000 for health care student loans, depending on the degree type
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Must be a U.S. citizen or permanent resident enrolled at least half-time in a degree-granting program at an eligible institution. International students can apply with a cosigner who’s a U.S. citizen or permanent resident.
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$1,000 up to cost of attendance
Overview
Education Loan Finance (ELFI) is a division of Tennessee-based SouthEast Bank owned by Education Loan Finance, Inc., a non-profit whose mandate is to provide access to higher education. ELFI launched in 2015 and offers undergraduate, graduate, and parent private student loans as well as student loan refinancing.
ELFI student loans and refinance loans are available to residents in all U.S. states including Puerto Rico. Borrowers can benefit from no application, origination, or prepayment fees. ELFI also offers flexible repayment terms and competitive rates, however there’s no cosigner release option and the lender doesn’t offer any discounts.
Loan amounts
$1,000 - Cost of attendance
Cosigner release
A cosigner may not be taken off a loan, but the borrower can apply for a new loan without their cosigner.
Eligibility
All 50 states as well as Washington DC and Puerto Rico.
Read full reviewLoan Amounts
$1,001 up to 100% of school certified cost of attendance
Overview
INvested is an Indiana company that offers affordable student loans exclusively to state residents. Loans are available to Indiana students and parents who can meet income and credit requirements, or who have an eligible cosigner. Borrowers can borrow as little as $1,001 or as much as the school-certified cost of attendance minus other aid.
INvested provides detailed information on eligibility so borrowers can quickly determine whether to apply for a loan — however, there’s no option to prequalify with a soft credit check. Cosigner release is also available after just 12 on-time payments, considerably shorter than many other lenders.
Loan amounts
$1,001 minimum, up to the school certified cost of attendance
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Loans are available to Indiana residents only. Borrowers must have a FICO score of 670 or higher, a 30% maximum debt-to-income ratio or minimum monthly income of $3,333, continuous employment over two years, and no major collections or defaults in recent years. Borrowers who do not meet income or credit requirements can apply with a cosigner.
Read full reviewLoan Amounts
$1,500 up to school’s certified cost of attendance less aid
Overview
Massachusetts Educational Financing Authority (MEFA) is a not-for-profit lender that offers low-cost undergraduate and graduate school loans to students nationwide. While only fixed-rate loans are available, interest costs may be lower than what you see with other private loans.
While you can apply with a cosigner to lock in the best rate possible, removing that cosigner later may be tough. Only one repayment plan allows cosigner release, and you must make four years of consecutive on-time payments and meet other credit and income requirements to qualify.
Loan amounts
$1,500 minimum up to school-certified cost of attendance
Eligibility
Must be a U.S. citizen or permanent resident, enrolled at least half time at a degree-granting, nonprofit institution, and must maintain satisfactory academic progress. Must have no history of default on an education loan and no history of bankruptcy or foreclosure in the past 60 months. Applicants who can’t meet the minimum credit and income requirements may apply with a cosigner.
Read full reviewGrad PLUS loan FAQ
Below are answers to some frequently asked questions about graduate PLUS loans.
What is a Direct PLUS Loan?
Direct PLUS Loans help students pay for higher education. There are two types of Direct PLUS Loans: graduate PLUS loans and parent PLUS loans. You can borrow up to the cost of attendance with a Direct PLUS Loan, minus any other financial assistance you receive (such as scholarships and grants). For the 2023-24 school year, these loans have a fixed interest rate of 8.05%.
Is it hard to get a grad PLUS loan?
Grad PLUS loans can be harder to qualify for than other federal student loans. You likely won’t qualify for the loan if you have adverse credit history, or if you’re not a graduate or professional student in school at least half-time. You also need to be a U.S. citizen or an eligible noncitizen, such as a permanent resident.
Can my grad PLUS loans be forgiven?
Grad PLUS loans are eligible for certain forgiveness programs, such as Public Service Loan Forgiveness (PSLF). These loans are also eligible for income-driven repayment plans, like the Saving on a Valuable Education (SAVE) plan. These repayment plans cap your monthly loan payments based on your discretionary income and family size. After making payments under an IDR plan for 20 to 25 years (depending on the plan), any remaining loan balance is forgiven.
Meet the expert:
Kat Tretina
Kat Tretina is a freelance writer specializing in personal finance. Her work has been published in The Wall Street Journal's Buy Side, U.S. News, and Money.com.