Grad PLUS vs. Unsubsidized Loans for Graduate Students

Grad PLUS vs. Unsubsidized Loan: Which Is Right for Graduate Students?

Both Direct Unsubsidized Loans and Grad PLUS loans can help you pay for graduate school, but their borrowing limits, rates, and fees are different.

By Emily Guy Birken

Written by

Emily Guy Birken

Freelance writer

Emily Guy Birken is an authority on student loans and personal finance. Her work has been featured by MSN Money and MarketWatch.

Written by

Emily Guy Birken

Freelance writer

Emily Guy Birken is an authority on student loans and personal finance. Her work has been featured by MSN Money and MarketWatch.

Edited by Christy Bieber

Written by

Christy Bieber

Freelance writer

Christy Bieber has spent more than 16 years in personal finance and is an expert on student loans, debt, social security, and mortgages. Her work has been published by The Motley Fool, CBS News, and MSN.

Written by

Christy Bieber

Freelance writer

Reviewed by Richard Richtmyer

Written by

Richard Richtmyer

Richard Richtmyer is a senior editor with over 20 years of finance experience. He's an expert on student loans, capital markets, investing, real estate, technology, business, government, and politics.

Written by

Richard Richtmyer

Updated December 3, 2025

Editorial disclosure: Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”

Credible takeaways

Direct Unsubsidized Loans and Grad PLUS loans are the two primary federal student loan options for graduate and professional students.
Annual and aggregate borrowing limits are much higher for Grad PLUS loans, but the interest rate and origination fee are also much higher.
Both Direct Unsubsidized Loans and Grad PLUS loans offer paths to loan forgiveness.
Grad PLUS loans are being phased out for new borrowers after July 1, 2026.

Graduate students who need student loans to help pay for their education have two federal loan options: Direct Unsubsidized Loans and Grad PLUS loans.

Direct Unsubsidized Loans are much more popular. Including both undergraduate and graduate students, there were 34.7 million unique Direct Unsubsidized Loan borrowers in the third quarter of 2025, compared to just 1.8 million Grad PLUS loan borrowers.

These loan options have different borrowing limits, costs, and eligibility requirements. Here’s what you need to know about Grad PLUS vs. unsubsidized loan options so you can decide if either is right for you.

Current private student loan rates

What is a Direct Unsubsidized Loan?

Federal Direct Unsubsidized Loans are student loans offered by the U.S. Department of Education. Unsubsidized loans are available to help pay for undergraduate, graduate, or professional school, and eligibility is not based on financial need.

Annual loan limits for Direct Unsubsidized Loans change for undergraduates depending on their academic year. Unsubsidized loan limits for graduate students are the same across all years, capped at $20,500 annually.

There is also an aggregate limit of $138,500 for graduate students, including Direct Subsidized and Unsubsidized Loans used to pay for undergraduate education.

Interest rates on Direct Unsubsidized Loans are fixed, and grad students pay a higher rate than undergrads. The rate for Direct Unsubsidized Loans for graduate students who borrow between July 1, 2025, and June 30, 2026, is 7.94%. These rates are set every year for the academic year that runs from July 1 to the following June 30.

There is also a 1.057% disbursement fee for all Direct Unsubsidized Loans. The fee is deducted from each disbursement you receive.

What is a Grad PLUS Loan?

While Grad PLUS loans are also federal student loans, one key difference between a federal unsubsidized vs Grad PLUS loan is that PLUS loans are only offered to graduate and professional students.

Borrowers must also pass a credit check to qualify for Grad PLUS loans. While your interest rate won't change based on your credit score, you can't qualify for a PLUS loan with adverse credit unless you document extenuating circumstances or have a qualified endorser.

Graduate students may find Grad PLUS loans tempting because they can borrow more money, as student loan expert Mark Kantrowitz explains.

“Currently, Grad PLUS loans have an annual limit equal to the cost of attendance minus other aid, and no aggregate limit,” Kantrowitz says.

Unfortunately, the Grad PLUS loan interest rate is higher than federal unsubsidized loan rates. Grad PLUS loans taken out between July 1, 2025, and June 30, 2026, have an interest rate of 8.94% and all Grad PLUS loans have a 4.228% origination fee.

Editor insight: “The `One, Big, Beautiful Bill Act’ is eliminating Grad PLUS loans for new borrowers after July 1, 2026. There will also be new lifetime loan limits for graduate students. I recommend you plan early, as these changes may mean there is not enough federal funding to pay for graduate school, and private student loans will be the only option.”

— Christy Bieber, Student Loans Editor, Credible

How do Grad PLUS and unsubsidized loans compare?

The table below shows key differences between Grad PLUS vs unsubsidized loan options to make your grad student loan comparison easier.

	Grad PLUS Loans	Direct Unsubsidized Loans
Eligibility	Borrow before July 1, 2026, when PLUS loans are being phased out Be a U.S. citizen or eligible noncitizen Attend an eligible school and pursue a degree or certificate Enroll at least half-time Be a graduate or professional student Not have an adverse credit history	Be a U.S. citizen or eligible noncitizen Attend an eligible school and pursue a degree or certificate Enroll at least half-time
Annual/aggregate limits	Cost of attendance No aggregate limit	$20,500 per year $138,500 aggregate
Interest rates	8.94%	7.94%
Origination fees	4.228%	1.057%
Credit requirements	No adverse credit	None
Repayment option	Standard Graduated Extended Income-driven repayment (IDR)	Standard Graduated Extended Income-driven repayment (IDR)

Source: Studentaid.gov

Check Out: 6 Big Advantages of Federal Student Loans in 2025

Which loan is better for graduate students?

When exploring federal graduate student loans, in most cases, grad students should max out their Direct Unsubsidized Loans before turning to Grad PLUS loans. That's because these loans are much more affordable.

“The interest rates on Direct Unsubsidized Loans are lower than the interest rates on Grad PLUS loans,” Kantrowitz says.

The difference may only be a single percentage point, but it adds up over time.

In addition, the origination fee for the Direct Unsubsidized Loan is significantly lower than the fee for the Grad PLUS loan. Paying a 4.228% fee each time you get a loan disbursement makes these loans even more expensive.

It's also important to note that Grad PLUS loans will be eliminated as a borrowing option after July 1, 2026, due to changes made by the “One, Big, Beautiful Bill Act.” New borrowers after that time will not have the option to use these loans to pay for graduate or professional school.

How to decide between Grad PLUS and Unsubsidized Loans

If you’re deciding between Grad PLUS and unsubsidized loans, there are several factors to consider, including:

When you are borrowing: Grad PLUS loans are expected to be phased out for new borrowers after July 1, 2026.
The cost of attendance for your graduate or professional program: Will an unsubsidized loan cover your cost of attendance?
How close you are to the aggregate limit for Direct Unsubsidized Loans: If you have already used Direct Subsidized or Unsubsidized Loans to pay for undergrad, you may only have so much room left in your lifetime loan limit.
Your expected earnings after you have finished your graduate degree: A medical student or future lawyer may feel relatively confident about taking on expensive Grad PLUS loans since their future salary will be higher than average. But if you are pursuing a degree in a less lucrative field, it may make sense to focus on less expensive options.
Your need for flexibility during repayment: Federal student loans offer benefits, including deferment, forbearance, forgiveness, and multiple repayment options. Private loans don't. These benefits may make PLUS loans a better option than private loans.

FAQ

Can I take out both an unsubsidized and a Grad PLUS loan?

Open

Graduate students are eligible for both Direct Unsubsidized Loans and Grad PLUS loans. Typically, most experts recommend maxing out your unsubsidized loans before borrowing any Grad PLUS loans.

Do Grad PLUS loans have higher interest rates?

Open

Grad PLUS loans have higher interest rates than Direct Unsubsidized Loans. For the 2025-2026 academic year, Grad PLUS loans have a fixed interest rate of 8.94% while Direct Unsubsidized Loans for graduate or professional students have a fixed interest rate of 7.94%.

Is there a credit check for unsubsidized loans?

Open

There is no credit check or any other credit requirement for Direct Unsubsidized Loans. Grad PLUS loans do require a credit check, and borrowers must not have an adverse credit history to qualify.

Can I refinance Grad PLUS or unsubsidized loans later?

Open

Both Grad PLUS and unsubsidized loans can be consolidated with a federal consolidation loan, which maintains the borrower’s federal benefits. This is different from refinancing, which must be done through a private lender.

Borrowers can refinance both Grad PLUS and unsubsidized loans at any point when they qualify for a refinance loan. Refinancing could reduce their interest rate, lower their monthly payments, or shorten their repayment term. However, the borrower will lose all federal protections and benefits upon refinancing.

Are both loan types eligible for forgiveness?

Open

Both Grad PLUS loans and Direct Unsubsidized Loans are eligible for Public Service Loan Forgiveness and for forgiveness of the remaining balance after the completion of income-driven repayment.

Meet the expert:

Emily Guy Birken