Grad PLUS

As of July 1, 2006, federal Graduate PLUS loans were available for graduate and professional students to borrow. Similar to the Parent PLUS loan for parents of dependent undergraduate students, the Graduate PLUS loan is an unsubsidized federally guaranteed education loan with no annual or aggregate limits. It has no grace period and it goes into repayment as soon as the funds are disbursed to the borrower. It has the same deferment and forbearance options as the federal Stafford loan program. As such, graduate and professional students can postpone repayment using in-school deferment while enrolled at least half-time in a degree or certificate program of study.

Interest rates on Federal Family Education Loan Program (FFELP) Federal PLUS loans are fixed at 8.5%. Many lenders offer borrower benefits to reduce this interest rate during repayment, however. During any period of deferment or forbearance, interest can accrue and be added to the principal loan balance (capitalized) at the end of the deferment or forbearance period if it is not paid by the borrower as it accrues. There is also a 3.0% origination fee attached to the loan that, due to regulations, cannot be paid by the lender on the borrower's behalf.

Eligibility for PLUS loans require the applicant to (1) be a U.S. citizen/national or eligible non-citizen with a valid Social Security number, (2) pass a credit review and not have adverse credit history as defined by regulation (see credit criteria below), and (3) not be in default on any federal education loan or owe a refund on a federal education grant.

To get a PLUS loan, the applicant cannot have adverse credit based on the review of at least one credit report from a national credit reporting agency. Lack of a credit history or insufficient credit history is not considered adverse credit. Current regulations define adverse credit as when at least one of the following applies to the applicant:

• currently 90 days or more delinquent on repayment of any debt;
• has had debt discharged in bankruptcy during the past five years; or
• evidence of a default, foreclosure, tax lien, repossession, wage garnishment, or write-off of a Title IV debt during the past five years.

If the applicant has adverse credit, he or she can provide an endorser (cosigner) who does not have adverse credit to get a PLUS loan.

The federal Graduate PLUS loan is a federally guaranteed loan that is borrowed from a bank or other lending institution (e.g., Access Group, Sallie Mae) and must be certified by one's school of attendance. Students should check with their school's financial aid office for information on applying.