Federal Loans: Student PLUS Loans for Graduate and Professional Students
These PLUS loans are available to graduate students and are similar to those available to parents of undergraduate students. They are offered through the Federal Direct Loan Program (FDLP) which disperses funds from the U.S. department of education.
Who is eligible?
These loans are available to U.S. citizens, permanent residents and other eligible non-citizens that are enrolled at least half-time in a program leading to an advanced degree. A good credit history is also a requirement for this loan. This means that the student can’t have defaulted on a debt, been over ninety days late for a payment or gone bankrupt. However, if a student has a poor credit history, they may find someone else with a good credit history to endorse the loan. This person agrees to pay the loan if the student does not repay it.
How much can a student borrow?
Students may borrow the difference between the cost of attendance and their other financial aid as calculated by the school.
What is the interest rate and are there fees?
Interest rates vary from year to year but have been in the seven percent to eight percent range in recent years. Interest is charged from the date of disbursement until the loan is paid in full. There is up to a three percent origination fee and a one percent default fee which are deducted from the disbursement amount.
How does a student apply for a PLUS loan?
Even though a PLUS loan is not a needs-based loan, students must still submit the Free Application for Federal Student Aid (FAFSA) to apply for one. In addition, they must also complete a Federal Direct PLUS Loan Application and sign a Master Promissory Note, both of which are available from the school’s financial aid office.
When does a student have to start repayment of the loan?
Students can receive an in-school deferment until they graduate as long as they attend half-time. The first payment is due 45 days after the deferment ends.
Student PLUS Loan Tips
- Max out Stafford loans first - Students should not take a PLUS loan until they’ve reached their loan maximums under the Stafford loan program since the terms for PLUS loans are not as favorable.
- PLUS loans are usually a better option than private loans - PLUS loans have a fixed interest rate and they usually have lower fees.
- PLUS loans don’t look at FICO scores – While private loans consider FICO scores, PLUS loans only check for a bad credit history.
Resources
U.S. Department of Education: Student Aid on the Web’s PLUS Loans for Graduate and Professional Degree Students – Provides description of the Student PLUS loans.
U.S. Department of Education Direct Loan program – Describes details of all Direct Loan Program loans including Student PLUS loans.
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