Federal Direct Graduate PLUS Loan
As of July 1, 2006, graduate students have an additional federal loan option to assist them with the costs of a graduate education. The Federal Direct Graduate PLUS Loan allows graduate students to take advantage of what was formerly a loan specifically for parents of undergraduate students. Now, graduate students who pass a credit check may borrow a PLUS loan under their own signature for their graduate education costs. Graduate students may borrow a Federal Direct Graduate PLUS Loan to cover their cost of attendance less the amount of their Federal Direct Loans and any other financial assistance offered from any other source.
The Federal Direct Graduate PLUS Loan allows you to defer some of the costs of attendance until you have either completed or left the program. These loans must be repaid, including interest and all applicable fees. The Federal Direct Graduate PLUS Loan is unsubsidized; you will be responsible for the interest, which starts accruing during your period of enrollment. There is no grace period for repayment of a Federal Direct PLUS Loan. You will be eligible for an in-school deferment while you are enrolled at least half-time, but will enter repayment sooner than under the Federal Direct Loan program.
Direct Graduate PLUS Loan Amount
If you have a prior bachelor's degree, or if you have completed at least three years of undergraduate study, you will be eligible for the Federal Direct Graduate PLUS Loan. For those admitted without at least three years of undergraduate study completed, you will not be eligible for the Federal Direct Graduate PLUS Loan and should instead look at your private loan options.
If eligible for the program, your maximum Federal Direct Graduate PLUS Loan eligibility is equal to your cost of attendance budget less your Federal Direct Loans and any other financial assistance offered to you from any other source.
The Federal Direct Graduate PLUS Loan is subject to a mandatory loan origination fee of 4%.
The interest rate on all Federal Direct Graduate PLUS Loans is 7.9% fixed for the life of the loan.
Repaying Your Loan
No payments are required while you are in school at least half-time. However, upon graduating or leaving school, there is no grace period before repayment begins on a Federal Direct Graduate PLUS Loan.
Repayment options include:
- The standard repayment plan – allows you to pay off your loans in 10 years.
- The extended repayment plan – allows you to repay your loans over a maximum term of 25 years and reduces your monthly payment.
- The graduated repayment plan – allows you to make smaller payments at first and larger payments every few years.
- The income based repayment plan – allows you to make monthly payments based on a percentage of your yearly income.
Once you're in repayment, you have two options to suspend or to reduce your monthly payments.
If you qualify for one, a deferment is a right as a borrower. A deferment allows you to postpone your loan payments for a specific period of time. During a deferment of the Federal Direct Graduate PLUS Loan, interest on your loan will accrue. Deferments are available for at least half-time enrollment (no limit), for unemployment (three year limit) and for economic hardship (three year limit). You must apply for a deferment and be approved for it before your payments will be postponed.
A forbearance is an option granted to you at the discretion of your student loan holder. You may apply for a forbearance to temporarily postpone or reduce your monthly payments if you are experiencing temporary financial difficulties. The terms of a forbearance are on a case-by-case basis and are arranged specifically for you by your student loan holder. A forbearance may result in an increased monthly payment upon resuming regular payments.
Tracking Your Loans
The Department of Education has created a central database for student aid called the National Student Loan Data System (NSLDS) (nslds.ed.gov). NSLDS takes information from schools, lenders and guarantee agencies on a regular basis to provide the most up-to-date information for you. Using your federal PIN, you are able to access your student aid records and track your federal loans after disbursement.
The Department of Education created a Federal Student Aid (FSA) (fsahelp.ed.gov) Ombudsman to assist federal loan borrowers resolve disputes regarding their loans. While the Ombudsman cannot reverse a decision made by another party, they will assist borrowers with a neutral third-party position that can recommend solutions. If they determine that you have been treated unfairly, they will work on your behalf to fix the problem with other agencies.