Grad PLUS Loan

Grad PLUS loans are an expansion of the FFELP PLUS loan program and are available to graduate and professional students. They are meant to fill the gap between the student's financial aid package and the cost of education. The main difference between the Parent Loan for Undergraduate Students (PLUS loan) and the Grad PLUS loan is that the student is the borrower of the latter, not the parent. Here is an overview of the Grad PLUS loan program.

Eligibility Requirements
To qualify for a Grad PLUS loan, you must:

Be a U.S. citizen or eligible non-citizen.
Be enrolled at least half-time in an eligible graduate or professional program.
Complete the Free Application for Federal Student Aid (FAFSA).
Apply for your maximum annual Stafford eligibility, both subsidized and unsubsidized.
Have a valid social security number.
Not be in default on a federal student loan or owe money back on a federal student grant.
Be registered with the Selective Service (if required).
Have no adverse credit history.

This is a list of general federal eligibility criteria. Based on your circumstances, there may be more specific requirements you must meet.

Credit Criteria
One of the eligibility requirements for a Grad PLUS loan is to not have an adverse credit history. You will not pass the credit check if:

You are 90 days or more delinquent on the repayment of any debt.
You had any debt discharged in bankruptcy any time during the five years preceding the date of the credit check.
You have been the subject of a default determination on any debt, foreclosure, tax lien, repossession, wage garnishment, or write-off of a Title IV debt any time during the five years preceding the date of the credit report.

Keep in mind that a lack of credit is not considered adverse in regards to the Grad PLUS loan program. If you do have adverse credit, you may be able to use a creditworthy endorser to obtain a Grad PLUS loan. Check with your lender for their policy on endorsers.

Interest Rate
The interest rate for Federal Grad PLUS is fixed at 8.5%, although some lenders may offer discounts on the rate. Be sure to research different lenders, so you can compare benefits and services.

Loan Limits
There is no annual maximum amount for the Grad PLUS. Graduate/professional students can borrow up to the cost of education minus other financial aid received. The minimum loan amount is $100.

Repayment
All PLUS loans must enter repayment within 60 days of the loan's final disbursement. There is no six-month grace period for Grad PLUS loans, as there is for Federal Stafford loans. However, as a Grad PLUS borrower, you can automatically receive an in-school deferment if:

You are enrolled at least half-time.
You are enrolled in a graduate fellowship program approved by the Secretary of Education.

Grad PLUS borrowers are required to pay the interest during the life of the loan and are allowed to make quarterly interest payments on the loan(s). Grad PLUS loans can be consolidated at a fixed rate with other FFELP loans.

Posted: 6/1/2006