What to Know About Grad PLUS Loans: A Guide for Graduate Students and Families
Graduate school can be a major investment, and for many students, federal student loans play a key role in making it possible. One option available to graduate and professional students is the Grad PLUS Loan, a federal loan that can help fill the gap between other aid and the full cost of attendance. This guide breaks down how Grad PLUS Loans work, who qualifies, and what to consider before borrowing.
What Is a Grad PLUS Loan?
The Grad PLUS Loan is a federal loan offered by the U.S. Department of Education to graduate or professional students. It can be used to pay for tuition, fees, housing, books, and other education-related expenses. Unlike Direct Subsidized or Unsubsidized Loans, Grad PLUS Loans require a credit check, although the criteria are less strict than private loans.
How Much Can You Borrow?
You can borrow up to the full cost of attendance at your school, minus any other financial aid you receive. This includes grants, scholarships, and other student loans. The school sets the cost of attendance, which covers not just tuition but also living expenses and supplies.
What Are the Interest Rates and Fees?
Grad PLUS Loans carry a fixed interest rate that is set each year on July 1. For the 2024-2025 school year, the interest rate is 8.05 percent. In addition to interest, there is a loan fee that is deducted from each disbursement. As of October 2024, the loan fee is 4.228 percent.
Repayment Options and Terms
Repayment begins six months after you graduate, leave school, or drop below half-time enrollment. Grad PLUS Loans are eligible for all federal repayment plans, including Income-Driven Repayment (IDR), which bases your monthly payment on your income and family size. They can also be consolidated with other federal loans and qualify for Public Service Loan Forgiveness (PSLF) if you work in eligible public or nonprofit roles.
What to Consider Before Borrowing
Grad PLUS Loans can be a helpful tool, but it's important to borrow responsibly. Because they have higher interest rates and fees than other federal loans, consider maximizing Direct Unsubsidized Loans first. Also, take a realistic look at your future income in your field. Will your expected salary support the debt you take on? Tools like CollegeROI can help you compare average salaries by graduate program and estimate monthly payments before you borrow.
Grad PLUS Loans are a flexible way to fund graduate school when other aid falls short, but they come at a cost. Understanding how much you need, what repayment will look like, and how your future income compares can help you make a smarter decision for your financial future. Always compare federal and private loan options, and use planning tools to avoid borrowing more than you need.
Want to Know if Your College Investment Is Worth It?
Use our free CollegeROI platform (www.yourcollegeroi.com) to calculate your personalized return on investment based on your major, financial aid, and future salary potential. Whether you're trying to choose a college or make sure you're on the right path, CollegeROI gives you the clarity you need to make smarter financial decisions.
