Table of Contents

How to Apply for a Graduate PLUS Loan: Your Comprehensive Guide

Applying for a Graduate PLUS loan can seem daunting, but breaking down the process into manageable steps makes it much easier. In short, here’s how you do it: first, complete the Free Application for Federal Student Aid (FAFSA). Then, apply directly through the Department of Education’s website, undergo a credit check, and sign a Master Promissory Note (MPN). Now, let’s delve into the details.

Understanding the Graduate PLUS Loan

The Graduate PLUS loan, also known as a Direct PLUS Loan for graduate or professional students, is a federal student loan designed to help cover the costs of graduate or professional school. Unlike some other federal loans, eligibility for a Grad PLUS loan is primarily based on credit history, not financial need. This means that as long as you don’t have an adverse credit history, you’re likely to be approved. Keep in mind that while credit history is a primary factor, you must still meet other general eligibility requirements for federal student aid.

Key Benefits of Graduate PLUS Loans

Higher Loan Limits: You can borrow up to the total cost of attendance as determined by your school, minus any other financial aid you receive.
Fixed Interest Rate: Graduate PLUS loans come with a fixed interest rate, offering predictability in repayment.
Federal Loan Protections: Access to income-driven repayment plans, deferment, and forbearance options.
Direct Loan Program: Serviced by the U.S. Department of Education, ensuring consistency and access to federal loan benefits.

Step-by-Step Application Process

Here’s a comprehensive breakdown of how to apply for a Graduate PLUS loan:

1. Complete the FAFSA

The first step in applying for any federal student aid, including the Graduate PLUS loan, is completing the Free Application for Federal Student Aid (FAFSA). You can access the FAFSA online at studentaid.gov. Ensure you have your Social Security number, driver’s license (if applicable), and your school’s federal school code. You’ll also need your tax information from the prior-prior year (e.g., for the 2024-2025 academic year, you’ll need your 2022 tax information).

Completing the FAFSA is crucial because it determines your eligibility for other federal student aid and provides your school with essential information for packaging your financial aid award.

2. Apply for the Graduate PLUS Loan Online

Once you’ve completed the FAFSA, you can proceed with the Graduate PLUS loan application. You’ll apply directly through the Department of Education’s website (studentaid.gov). You’ll need your FSA ID (username and password) to log in.

Navigate to the “Apply for Aid” section.
Select “Apply for a Direct PLUS Loan.”
Choose “Graduate/Professional Student” as your loan type.
Carefully fill out the application, providing accurate information. This will include details about your school, the loan amount you’re requesting, and your personal information.

3. Undergo a Credit Check

As previously mentioned, credit history is a significant factor in determining eligibility for a Graduate PLUS loan. The Department of Education will conduct a credit check to assess your creditworthiness. You cannot have an adverse credit history, defined as having accounts that are 90 days or more delinquent, having a default on a prior federal student loan, or having been subject to a foreclosure, repossession, tax lien, wage garnishment, or bankruptcy discharge within the past five years.

If you have an adverse credit history, you still have options. You can obtain an endorser (someone who agrees to repay the loan if you don’t) or document extenuating circumstances related to your adverse credit history. You’ll need to provide evidence to support your claim of extenuating circumstances.

4. Sign a Master Promissory Note (MPN)

If your credit check is approved (or if you secure an endorser or document extenuating circumstances), you’ll need to sign a Master Promissory Note (MPN). The MPN is a legally binding document that outlines the terms and conditions of the loan, including the interest rate, repayment schedule, and your rights and responsibilities as a borrower.

You can complete the MPN online at studentaid.gov using your FSA ID. Read the MPN carefully before signing it, ensuring you understand all the terms and conditions.

5. Loan Disbursement

Once you’ve completed all the steps, your school will receive notification of your approved loan. The loan funds will be disbursed directly to your school to cover your tuition and fees. If there are any remaining funds after your school charges are paid, the school will issue you a refund, which you can use for other educational expenses, such as books, housing, and transportation.

It is important to understand the refund policy of your school. Each school has different ways to send out the refund. You must be aware of that.

Frequently Asked Questions (FAQs)

1. What is the current interest rate for Graduate PLUS loans?

The interest rate for Graduate PLUS loans is fixed and determined annually by Congress. You can find the current interest rates on the Department of Education’s website (studentaid.gov). It’s crucial to understand that the interest rate is applied to the loan for its entire duration.

2. Is there a loan origination fee for Graduate PLUS loans?

Yes, there is a loan origination fee for Graduate PLUS loans. This fee is a percentage of the loan amount and is deducted from the loan proceeds before they are disbursed to your school. The fee is determined annually by Congress and is subject to change.

3. Can I consolidate my Graduate PLUS loans?

Yes, you can consolidate your Graduate PLUS loans with other eligible federal student loans into a Direct Consolidation Loan. Loan consolidation can simplify repayment by combining multiple loans into a single loan with one monthly payment. However, it may also extend your repayment term, which could result in paying more interest over the life of the loan.

4. What are the repayment options for Graduate PLUS loans?

Graduate PLUS loans offer several repayment options, including:

Standard Repayment Plan: Fixed monthly payments over a 10-year period.
Graduated Repayment Plan: Payments start low and increase every two years over a 10-year period.
Extended Repayment Plan: Fixed or graduated payments over a period of up to 25 years.
Income-Driven Repayment (IDR) Plans: Payments are based on your income and family size. Options include Income-Based Repayment (IBR), Pay As You Earn (PAYE), Saving on a Valuable Education (SAVE), and Income-Contingent Repayment (ICR).

It’s important to carefully consider your financial situation and choose the repayment plan that best fits your needs.

5. Can I defer or forbear my Graduate PLUS loan?

Yes, you may be eligible for deferment or forbearance of your Graduate PLUS loan under certain circumstances, such as economic hardship, unemployment, or enrollment in school. Deferment and forbearance allow you to temporarily postpone or reduce your loan payments. However, interest typically continues to accrue during deferment and forbearance, which can increase the total amount you owe.

6. What happens if I default on my Graduate PLUS loan?

Defaulting on a Graduate PLUS loan can have serious consequences, including:

Damage to your credit score.
Wage garnishment.
Withholding of tax refunds.
Ineligibility for future federal student aid.

If you are struggling to make your loan payments, it is crucial to contact your loan servicer immediately to explore options such as income-driven repayment plans, deferment, or forbearance.

7. How does the SAVE plan work for Grad PLUS loans?

The SAVE plan is one of the income-driven repayment options for federal student loans. It offers a more favorable calculation of discretionary income, potentially leading to lower monthly payments compared to other IDR plans. It also includes an interest subsidy, which means the government may pay some or all of the unpaid interest each month, preventing your loan balance from growing.

8. How is the “Cost of Attendance” determined?

The Cost of Attendance (COA) is an estimate of the total expenses you’ll incur while attending school for an academic year. It typically includes tuition and fees, room and board, books and supplies, transportation, and personal expenses. Your school determines the COA based on factors such as the program you’re enrolled in, your living arrangements, and the cost of living in the area.

9. Can I borrow more than I need with a Graduate PLUS loan?

Technically, yes, you can borrow up to the Cost of Attendance minus other financial aid. However, it’s generally not advisable to borrow more than you need. Overborrowing can lead to higher loan balances and increased interest payments over the life of the loan. Only borrow what is necessary to cover your educational expenses.

10. What is an endorser, and when do I need one?

An endorser is someone who agrees to repay your Graduate PLUS loan if you fail to do so. You may need an endorser if you have an adverse credit history and cannot document extenuating circumstances. The endorser must have good credit and meet other eligibility requirements.

11. Can I cancel a Graduate PLUS loan after it has been disbursed?

Yes, you have the right to cancel all or part of a Graduate PLUS loan within a certain timeframe after it has been disbursed. You must notify your school in writing within the cancellation period, which is typically 120 days from the date of disbursement.

12. Where can I find more information about Graduate PLUS loans?

You can find more information about Graduate PLUS loans on the Department of Education’s website (studentaid.gov). You can also contact your school’s financial aid office for personalized guidance and assistance. Don’t hesitate to ask questions and seek clarification on any aspect of the loan application process.

By understanding the Graduate PLUS loan program and following the steps outlined above, you can confidently navigate the application process and secure the funding you need to pursue your graduate education. Remember to borrow responsibly, explore all available repayment options, and prioritize managing your student loan debt effectively.