Graduate and professional students can borrow under the Direct PLUS Loan for Graduate and Professional Students Program. As of July 1, 2010 all federal student loans including the Grad PLUS loan are provided exclusively by the US government through the Direct Loan Program. The terms and conditions applicable to Parent PLUS Loans also apply to Graduate PLUS loans. You may borrow up to your cost of attendance (determined by your graduate or professional school) minus other financial aid including other loans. Like the Parent PLUS loan, the same federal credit requirements apply. The student must meet other criteria as well. Repayment begins within 60 days after the loan is fully disbursed. If you are still enrolled at least half-time you can qualify for an In-School Deferment to defer making payments. Contact your school once the final year’s disbursement is made to request the deferment. The loan carries a fixed rate of 7.9% for Direct loans with a 4% fee deducted at issuance of the loan. The standard repayment term is 10 years, but can be up to 25 years depending on if the borrower is eligible for the extended repayment plan.
In order to receive a Graduate PLUS Loan, you must first complete the Free Application for Federal Student Aid (FAFSA) and must apply for the maximum annual limit of Stafford Loan.
Because of the low interest rate environment, students with strong credit profiles may want to consider the option of a private loan instead of GradPLUS if they are comfortable with variable rate products or if they plan to repay the loan in a short period of time. However, it should be noted that Federal loans have more borrower friendly terms for repayment, consolidation and bankruptcy and in most cases, should be the first product considered.