Federal Direct Graduate PLUS Loan
The Federal Direct Graduate PLUS Loan allows graduate students with acceptable credit histories to borrow for educational costs while enrolled in at least six graduate credits at a post-secondary institution.
An eligible graduate Federal Direct Graduate PLUS borrower must:
- Be a U.S. citizen or eligible non-citizen (eligible non-citizens must supply documentation of their immigration status),
- Meet all of the requirements for the Federal Direct Program (for this reason, The Federal Department of Education requires a FAFSA to be on file prior to processing a Federal Direct Graduate PLUS Loan),
- Have a credit worthy history as determined by your lender, and
- Not be in default or owe a refund on any Title IV Federal Student Aid.
There are no annual or aggregate limits on Federal Direct Graduate PLUS loans; however you may not borrow more than the cost of attendance determined by the school, less any other financial aid received during the loan period. For example, if the academic year cost of attendance is $20,000 that is the maximum amount of financial assistance you may receive from all sources including the Federal Direct Graduate PLUS Loan; therefore if you receive $4,000 from other aid programs, borrowing is limited to $16,000 from the Federal Direct Graduate PLUS Loan program.
You must complete a Federal Application for Federal Student Aid (FAFSA) and be awarded prior to applying for a Federal Direct Graduate PLUS Loan. While not mandatory, it is strongly advised that you borrow from the Federal Direct Unsubsidized Loan program that offers more favorable loan terms and conditions before requesting funds from the Federal Graduate PLUS Program.
This is a loan fee deducted proportionately from each loan disbursement. This means the money disbursed will be less than the amount actually borrowed. You are responsible for repaying the entire amount borrowed and not just the amount disbursed.
A 4.228% origination fee applies to Federal Direct Loans first disbursed on or after October 1, 2020.
Fall 2022 – Summer 2023
As of 7/1/2022, interest rate for the 2022-2023 school year is 7.54% for Federal Direct Graduate PLUS Loans.
Fall 2023 – Summer 2024
As of 7/1/2023, interest rate for the 2023-2024 school year is 8.05% for Federal Direct Graduate PLUS Loans.
Interest begins accruing on loan amounts when they are disbursed and are the responsibility of the borrower, not the US Department of Education. Interest accrued during periods of deferment can either be paid periodically or can continue to accrue and be capitalized, which means the amount is added to the loan principal at the time of repayment.
Paying Back Your Loan
You are responsible for paying all Federal Direct Graduate PLUS Loans in full, plus interest. A repayment schedule is sent to you upon final disbursement of the loan. Generally, the maximum repayment period is 10 years and repaying the loan as quickly as possible lowers the cost of interest.
Interest and principal payments may be made before repayment is required, and you are especially encouraged to pay the interest charged on Federal Direct Graduate PLUS Loans while you are in school if possible. This will keep future monthly payments lower because the interest that accrues will be combined with the loan principal to determine interest calculations throughout the repayment period. There is no penalty for repaying Federal Direct Graduate PLUS Loans before they are due.
The Federal Direct Graduate PLUS Loan Program contains a variety of provisions designed for flexible repayment including deferments and forbearances, which may enable the borrower to temporarily suspend or reduce payments.
A deferment is a period of time during which repayment requirements are temporarily suspended. Deferments are granted for specific time periods and only for conditions set forth under federal law. The borrower may choose the deferment option on the loan application or may contact the Department of Education loan servicer to request a deferment.
If a borrower is not eligible for a deferment and has difficulty making the scheduled payments, contact the Department of Education loan servicer to discuss the possibility of a forbearance to reduce or suspend regular payment or to lengthen the repayment period. The loan servicer is eager to work with borrowers when they believe the borrower has a commitment to repay the loan. Forbearance is available if the borrower’s eligibility for deferment is exhausted, or if the borrower is involved in certain bankruptcy proceedings or is applying for a total and permanent disability cancellation. Interest continues to accrue the during periods of forbearance. Payment of interest can be made during the forbearance or it can be capitalized and added to the loan. If the interest is capitalized, the monthly payment amount may increase after the forbearance period has ended.
Failure to repay a Federal Direct Graduate PLUS Loan, known as defaulting, has serious consequences. All national credit bureaus are notified of loans in default and borrowers of federal educational loans in default are subject to collections procedures by external collection agencies, wage garnishment, and seizure of federal income tax refunds.
Contact your Department of Education loan servicer if you move, change your name, change your telephone number, change schools, if your graduate enrollment drops below six credits, or if you are unable to make your scheduled loan payments due to financial hardship.