As part of the Deficit Reduction Act of 2005, a change was made to the Federal PLUS loan program which allowed graduate students to borrow Federal Graduate PLUS loans.
Cost and Amount
Direct PLUS loans have higher rates than Subsidized and Unsubsidized Loans, but are expected to be cheaper than private alternative loans in most cases, and benefit from federal loan repayment options such as Income-Based Repayment and Public Service Loan Forgiveness, while private loans do not.
- Direct Graduate PLUS loans have a fixed interest rate of 7.6% for loans made between July 1, 2018 and June 30, 2019.
- For loans with first disbursements between October 1, 2018 and September 30, 2019, fees of 4.264% will be charged.
- Students may borrow Graduate PLUS loans up to the school’s cost of attendance minus other aid.
- There is no lifetime limit.
Credit History Requirements
Graduate PLUS loan borrowers must not have an adverse credit history.
- PLUS lenders will check a borrower’s credit prior to approving a PLUS loan
- A borrower must not have a current delinquency of 90 days or more, and must not have any of the following items within the past five years: Default, Bankruptcy, Discharge, Foreclosure, Repossession, Tax Lien, Wage Garnishment, Write-off of a Title IV Debt, or Open Collection.
- PLUS loans have a standard ten-year repayment period, and a minimum monthly payment of $50.
- Repayment begins within 60 days, but payments can be deferred while a student is attending school at least half-time.
- Borrowers may select other repayment options, such as income-derived payment plans, once they are no longer in school.
The Federal Graduate PLUS Loan Application Process
The application process for the Federal Graduate PLUS Loan is similar to that of Direct Subsidized and Direct Unsubsidized Loans. See the description of the Federal Direct Unsubsidized Loan for more details.
As with other federal loans, a student must file a FAFSA to establish eligibility, even though the PLUS is not a need-based loan.
The PLUS has its own separate Master Promissory Note which must be completed by the student in either an electronic or paper form.