A graduate plus loan is a type of federal student loan designed to fill any financial gaps left by other types of federal student aid like grants and scholarships.
Graduate plus loans tend to come with higher interest rates than other federal student loans, so there are some factors you should take into account before applying. To determine if a graduate plus loan is suitable for you, use our free student loan calculator to determine your financial need.
What is a graduate plus loan?
A graduate plus loan is a type of federal student loan designed specifically for graduate students. These loans can help cover tuition, room and board costs as well as other eligible program costs.
However, you should be aware that these loans have higher interest rates and origination fees than other federal student loans, so it’s essential to weigh all options before deciding which one is best suited for you. You could also combine these loans with other methods of funding your education such as a 529 savings plan.
If your credit is good, then you can borrow up to the full cost of attendance for your course minus any financial aid received. On the contrary, if your credit is bad, a private student loan or other means may be more suitable. Furthermore, delaying graduate studies until after improving your score could give more time for saving and potentially save more money in the long run.
How do I apply for a graduate plus loan?
Applying for a graduate plus loan requires filling out the Free Application for Federal Student Aid (FAFSA). This form requires both personal and financial data. Once submitted, your school will send you an award letter outlining any federal aid eligible to you.
In addition to federal loans, you have other ways of financing your education. These may include scholarships, grants, fellowships and assistantships that provide money that you don’t have to repay.
Before applying for any type of loan, it’s wise to assess your financial situation. If you’re having trouble making ends meet, saving money might be wiser before using them to pay for graduate school expenses.
Before applying for a graduate plus loan, you must sign the Master Promissory Note (MPN). You will need to verify your identity and address, provide two references, and sign the document electronically.
What are the benefits of a graduate plus loan?
A graduate plus loan can be an advantageous source of funding for students who require additional financial aid. It has a low interest rate and can be repaid in various ways.
Additionally, Grad PLUS loans come with a range of consumer protections and multiple repayment plans, including income-driven repayment that can help you save money over time. Furthermore, the interest you pay on these loans may be tax deductible.
Another advantage of a Graduate PLUS loan is its lower maximum limit compared to many other student loan types. This may be especially advantageous if you’re enrolling in an expensive program.
To qualify for a Grad PLUS loan, you must be an eligible graduate or professional student enrolled at least half-time and meet certain credit requirements. Even with poor credit history, you can still receive the loan if you find an endorser (the federal equivalent of cosigning) who has excellent credit and can provide documentation of extenuating circumstances.
What are the disadvantages of a graduate plus loan?
Grad PLUS loans can be an attractive option for graduate students who need to cover expenses not covered by grants and scholarships. However, like any type of debt, they come with its drawbacks.
First and foremost is the interest rate. These federal student loans are unsubsidized, meaning you will pay interest as soon as the funds are disbursed.
One major disadvantage is the loan origination fee – 4.228% which is deducted from your total loan amount, making it costlier than other forms of borrowing.
If you’re uncertain if a Grad PLUS loan is suitable for you, other alternatives such as private student loans may be less expensive and offer various repayment options like income-driven repayment or student loan forgiveness for certain borrowers. Nonetheless, they do not have all of the protections provided by federal student loans, so it’s important to do your due diligence when selecting which option is best suited for you. The best way to decide which route to take is by consulting a student loan expert.
