Student advocates stress the importance of students having accurate, up-to-date information on the cost of higher education and the range of financial aid choices available to them, including loans.

This is particularly true for graduate students weighing the pros and cons of taking out federal Grad PLUS student loans, which allow borrowers to take out as much as the full cost of tuition.

When deciding whether or not to take out a Graduate PLUS loan, students should evaluate their financial assistance arrangement, determine how much money they will need to borrow to meet their expenses, and determine whether or not they will generate enough to afford the monthly loan payments.

What Are Grad PLUS Loans?

Students in graduate and professional programs have access to a specific Direct PLUS Loan product called a Graduate PLUS Loan. In comparison to other federal loan programs like Direct Subsidized and Unsubsidized Loans, these loans often have higher interest rates.

In addition to that, there is a fee for the loan disbursement that is deducted from the total amount that is borrowed.

Applying for a Graduate PLUS Loan requires two applications: the FAFSA and the Direct PLUS Loan Application. A check of your credit history is also going to be required of you.

Payment on a Grad PLUS Loan does not have to be made until six months after the borrower graduates, leaves school, or drops below half-time enrollment.

However, you will continue to be responsible for paying interest on the loan even while you are enrolled in school and even though you have a grace period of six months. You have the option of paying the interest that has accrued or allowing it to capitalize, which means that it will be included in the overall principal amount of the loan.

How Do Grad PLUS Loans Work?

Graduate PLUS loans cannot exceed the difference between the total cost of attendance and other forms of financial help (such as scholarships, grants, and fellowships) if you are awarded one. The money will be used to pay for things like your tuition, lodging & board, and other school-related expenses. Use any leftover money for whatever other school-related costs you have, such as textbooks.

In addition to the interest you pay on your graduate PLUS loan, you will also be responsible for paying an origination fee to reimburse the costs incurred by the U.S. Department of Education in providing you with your loan.

No payments are required on a federal grad PLUS loan as long as you are enrolled at least half-time, or for six months after you graduate, but interest will begin to accumulate as soon as the loan is disbursed.

You have the option of paying the interest while you are attending school, or you can choose to allow it to be capitalized, in which case it will be added to the principal balance of your loan. Depending on the method of loan repayment that you decide to go with, you could have anywhere from ten to twenty-five years to pay back your loan.

What Do Grad PLUS Loans Cover?

The complete cost of your education can be covered via Grad PLUS loans. All of the following are included in this cost for higher education:

  • Tuition 
  • Fees
  • Textbooks 
  • Supplies
  • Transportation and accommodation (and various other costs of living)
  • Costs linked to a disability
  • Costs related to approved study-abroad opportunities
  • Loan costs
  • Childcare

How to Apply for Grad PLUS Loans

Here’s what you need to know about applying for a Grad PLUS Loan:

  1. Submit your FAFSA application. Applying for federal student aid (FAFSA) should be your initial step in securing funding for graduate study. The findings of your FAFSA application will be used by your school to determine the number of federal grants and loans for which you are eligible.
  1. You should try to get some kind of financial aid, like a scholarship or grant. Scholarship programs and grants are great financial aid options because they do not need to be repaid like student loans. Scholarships and grants are available in unlimited amounts, so it’s wise to seek as many as possible. Depending on your FAFSA assessment, your school may additionally offer you scholarship opportunities.
  1. Borrow from the federal government. After submitting your FAFSA, your chosen school will give you a financial aid award letter outlining the federal aid you have been granted. The choice to accept federal loans and grants, such as Direct Unsubsidized Loans, is ultimately yours to make. Accomplish a Direct PLUS Loan Application if you’re also interested in a Grad PLUS Loan. A Direct PLUS Loan application should be filled out if it is accepted by the school. 

    You’ll need to choose a school, decide on a loan amount, and give the institution permission to examine your credit as part of your application process. They will check your credit report for any negative information. You will require an endorsement or proof that the unfavorable items are wrong or that unusual circumstances exist in order to be authorized if they exist.
  1. Don’t let the lack of funding stop you from furthering your education. Private student loans are available to help bridge the financial gap left after applying for and receiving all available scholarships, grants, and federal student loans. Private loans, on the other hand, have their own advantages over federal loans, such as the flexibility to apply whenever you choose and the possibility of receiving a larger loan amount.

Grad PLUS Loans: Pros and Cons

A Grad Plus Loan is not applicable to everyone. The following are a few of the benefits and drawbacks of this loan type that you should think about.


  • Borrow as much as necessary to cover tuition and living expenses (excluding any additional financial assistance)
  • Throughout the term of the loan, the interest rate will not change.
  • Working for a nonprofit, in a position in the government, or for another PSLF-eligible institution makes you eligible for loan forgiveness.


  • Graduate PLUS loans often have higher interest rates than other types of federal loans.
  • If you have a history of credit problems, it is possible that you will not be approved for the loan.
  • Besides the borrower’s death, there are a few circumstances under which a Grad PLUS loan could be forgiven.

Should You Take Out Grad PLUS Loans?

There are two types of federal loans that are available to students who are pursuing graduate or professional degrees. These loans are known as Direct Unsubsidized Loans and Grad Plus Loans.

If you find yourself in a position where you need to borrow money for school, it is generally recommended that you take out unsubsidized loans before turning to PLUS Loans. This is due to the fact that the interest rates on unsubsidized loans are lower than those on PLUS Loans.

Private student loans are another option for financing your graduate education. These loans can be obtained through a variety of private lenders, including traditional and online banks and credit unions, as well as online lenders. Bear in mind that private loans often necessitate either high credit scores or a creditworthy cosigner.

No matter whatever form of student loan you decide to go with, it is essential that you take into consideration how much money you will have to pay back. As a result, you’ll be ready to handle any unexpected costs.

Bottom Line

Borrowing from the federal government is a viable option for financing graduate studies. However, before you take out student loans, you should research other sources of money that you won’t have to pay back, such as grants, assistantships, fellowships, and scholarships.

Make use of online resources that can connect you to scholarships that are intended solely for graduate students. It’s possible that you’ll still need additional funding even after you’ve made the most of the money you don’t have to pay back and researched federal student loans.

When this occurs, applying for a private student loan might be the best option. The majority of private student loans do not require borrowers to pay an origination fee, and some of these loans provide expanded repayment options, making them a potentially competitive alternative.

In whichever way you decide to pay for your graduate education, you can be certain that you are taking a serious commitment to your own future and making an investment in yourself.


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