Understanding Grad PLUS Loans: A Simple Guide

Updated on April 9, 2024

At a Glance

  • Grad PLUS Loans are federal loans for graduate and professional students to fund their education.
  • They cover expenses like tuition, room, board, and more. Unique to Grad PLUS Loans: they require a credit check, have higher interest rates than some federal loans, and allow borrowing up to the full grad school cost minus other aid.
  • To apply, complete the FAFSA and the Direct PLUS Loan Application. Repayment begins after disbursement but is typically deferred for students attending half-time or more, with several repayment and forgiveness options available.

If you’re thinking about attending graduate school or are already knee-deep in your advanced studies, you might be wondering how to cover the hefty costs associated with it. Beyond scholarships, assistantships, and standard federal loans, there’s another option you might have come across: Grad PLUS Loans. Let’s dive into this topic with a simple and informative perspective.

What Are Grad PLUS Loans?

Grad PLUS Loans are federal loans that graduate and professional students can use to pay for graduate school expenses. They are a part of the U.S. Department of Education’s Direct Loan Program. Unlike other federal student loans, Grad PLUS Loans require a credit check.

What Can You Use Them For?

Similar to other federal student loans, Grad PLUS Loans can be used for school-related expenses. These loans, which are obtained from the U.S. Department of Education, can help students deal with any remaining expenses for attending grad school.

Some of the costs they cover include:

  • Tuition
  • Room and board
  • Books
  • Transportation
  • Equipment and technology
  • Other expenses related to grad school

How Do Grad PLUS Loans Differ from Other Federal Student Loans?

There are a few key differences that set Grad PLUS Loans apart. These include:

Credit Checks

As mentioned earlier, these loans require a credit check. If you have an adverse credit history, you might need an endorser (similar to a co-signer) to get the loan.

Interest Rate

Grad PLUS Loans typically have a higher interest rate than Direct Unsubsidized Loans for graduate students. It’s wise to compare current rates before deciding.

Borrowing Limit

One of the most appealing features of Grad PLUS Loans is that you can borrow up to the full cost of your graduate education minus any other financial aid received. This means that if scholarships or other federal loans don’t cover all your costs, then Grad PLUS can fill in the gaps.

How to Apply for a Grad PLUS Loan

Are you convinced that Grad PLUS Loans are the right choice for you? Here are the steps to take to apply:

  1. Complete the Free Application for Federal Student Aid (FAFSA).
  2. If you get approved for financial aid, and you decide to pursue a Grad PLUS Loan, you need to complete the Direct PLUS Loan Application.
  3. If you’re granted the loan, you must also sign a Master Promissory Note (MPN) that outlines the terms of the loan.

Grad PLUS Loan Repayment

The repayment of your Grad PLUS Loans will start right away, but you have some options that can help you and the possibility of loan forgiveness for many fields including professors and teachers.. 

Start Date 

Repayment begins once the loan is fully disbursed. However, for graduate students, repayment is typically deferred while you’re in school at least half-time and for an additional six months after you graduate, leave school, or drop below half-time enrollment.

Options 

You have various repayment plans, including income-driven plans that set your monthly payment based on your income and family size.

Loan Forgiveness 

Grad PLUS Loans are eligible for Public Service Loan Forgiveness if you work in certain public service jobs and make 120 qualifying monthly payments.

Things to Consider When Choosing a Grad PLUS Loan

While Grad PLUS Loans offer you a way to cover the full cost of your graduate education, remember that they typically come with a higher interest rate than other federal student loans. So, it’s important to borrow only what you truly need and have a repayment strategy in place.

9 Alternatives to Use When Grad PLUS Loans Aren’t an Option

Unfortunately, Grad PLUS loans aren’t always enough to cover the costs of your education. Sometimes, they’re not even an option. Luckily, there’s a number of alternatives to Grad PLUS loans that you can consider. These are:

1. Federal Direct Unsubsidized Loans

These are federal loans available to both undergraduate and graduate students, regardless of financial need.

  • Pros: Typically have lower interest rates than Grad PLUS Loans, and no credit check is required.
  • Cons: There are borrowing limits. For graduate and professional students, the limit is usually $20,500 per year.

2. Scholarships and Fellowships

Scholarships and fellowships represent free money awarded to students based on academic merit, specific talents, or other criteria.

  • Pros: You don’t need to repay scholarships or fellowships.
  • Cons: Highly competitive and may require applications, essays, or other qualifications.

3. Graduate Assistantships

Graduate assistantships are positions offered by colleges where students teach or do research in exchange for a stipend.

  • Pros: They provide work experience, tuition waivers or discounts, and sometimes health benefits.
  • Cons: Can be demanding and might impact the time available for studies.

4. Private Student Loans

Private student loans include loans offered by banks, credit unions, or other private lenders.

  • Pros: Might offer competitive interest rates for borrowers with excellent credit.
  • Cons: Typically have higher interest rates than federal loans, might require a co-signer, and don’t come with federal benefits like income-driven repayment plans.

5. Employer Tuition Reimbursement

Some employers also offer tuition reimbursement as a part of their benefits package.

  • Pros: Helps reduce or eliminate the cost of graduate school.
  • Cons: May come with stipulations, such as staying with the company for a certain period after completing the program.

6. Work-Study Programs

Work-study programs are federal and state-sponsored programs that allow students to work part-time jobs in their field of study.

  • Pros: Earn money while gaining relevant work experience.
  • Cons: Limited availability and might not cover all educational costs.

7. Payment Plans

Many schools offer monthly payment plans that allow students to spread out the cost of tuition over several months.

  • Pros: They’re helpful in managing tuition costs without taking on debt.
  • Cons: They require upfront planning and regular payments.

8. Personal Savings

If you don’t want to take out a loan and get in debt, you can start using your personal funds to pay for graduate school. For this to work, you must start saving in advance and make sure you have enough to cover all expenses. 

  • Pros: No debt or interest accrual.
  • Cons: Might deplete savings and not be enough to cover all costs.

9. Military Benefits

If you’re a veteran, active-duty service member, or a dependent, you might be eligible for educational benefits through programs like the Post-9/11 GI Bill.

  • Pros: Can cover a significant portion of educational expenses.
  • Cons: Requires military service and might not cover all educational expenses.

Private Student Loans As an Alternative to Grad PLUS Loans

Navigating the world of higher education can sometimes come with financial hurdles, especially when certain federal loan options like the Grad PLUS loans aren’t within reach. However, several private lenders step up to fill this gap, offering tailored solutions to students looking to fund their advanced degrees. Here’s a look at some top contenders in the private student loan sector for those in such situations.

AmOne (Best for Okay to Good Credit)

AmOne serves as a robust platform for students who have credit ratings that sit in the okay to good spectrum. Functioning as a liaison between borrowers and an assortment of lenders, AmOne simplifies the loan-seeking process. Their strength lies in helping students access a network that could present them with reasonable loan options, even without the availability of Grad PLUS loans.

AmOne Personal Loan

4.5
Stilt’s lender ratings reflect the findings and opinions of our editorial staff. Our scoring methodologies consider a wide array of factors and data points for every lender, offering, and financial solution.
Min. credit score

600

Fixed APR

3.99%-35.99%

Variable APR

N/A

Overview

  • Minimum credit score: 600.
  • Fixed APR: 3.99%-35.99%.
  • Loan amounts: $1,000 to $50,000.
  • Repayment: 1 to 7 years.

Qualifications

  • Must be at least 18 years old.
  • Must be a U.S. citizen or permanent resident.
  • While there’s no specific income requirement, a consistent source of income is essential for the applicant.

Pros

  • Suitable for individuals with lower credit scores.
  • No cost for the matching service.
  • Attractive loan rates.

Cons

  • Acts as an intermediary, not a direct lender.
  • Risk of multiple contacts from prospective lenders.
  • Lack of clarity on lender details.

Spring Loans (Best for Bad Credit and No Credit)

Graduate students who may not have had the opportunity to build a strong credit history, or those who’ve encountered credit challenges, will find Spring Loans a welcoming platform. By adopting an approach that goes beyond just credit scores, Spring Loans presents solutions for those students who are determined to continue their education irrespective of past financial setbacks.

Spring Loans Personal Loan

4.2
Stilt’s lender ratings reflect the findings and opinions of our editorial staff. Our scoring methodologies consider a wide array of factors and data points for every lender, offering, and financial solution.
Min. credit score

None

Fixed APR

27.00%

Variable APR

N/A

Overview

  • Minimum credit score: None.
  • Fixed APR: 27.00%
  • Loan amounts: $3,000.
  • Repayment: 48 months.

Qualifications

  • Demonstrate a recurrent income.
  • Minimum age prerequisite: 18 years.
  • Validate U.S. citizenship status with an SSN.
  • Provide a legitimate U.S. driver’s license or a state identity card.
  • Establish a functional bank account for incoming deposits.
  • Adhere to any specific demands by the loan provider.

Pros

  • Open to applicants with any credit background.
  • Four-year loan period aids in structured financial management.
  • The $3,000 offer addresses several short-term financial challenges.
  • Wide-reaching eligibility criteria invite a broad spectrum of applicants.
  • The focus on dependable income over job title benefits varied income sources.

Cons

  • The set 27% APR is higher than many alternatives.
  • Restriction to a $3,000 loan might not cover all financial outlays.
  • Possessing specific IDs is mandatory, sidelining some applicants.
  • A prerequisite for an ongoing bank account may limit certain users.

First Premier Lending (Best for Bad Credit)

First Premier Lending extends its lending hand primarily to those students who’ve had a bumpy credit journey. By taking into account more comprehensive financial aspects and not just credit history, they offer a chance for students to secure the funds they need. Their nuanced understanding of borrower needs makes them a notable option when traditional routes, like the Grad PLUS loans, are closed.

First Premier Lending Personal Loan

4.2
Stilt’s lender ratings reflect the findings and opinions of our editorial staff. Our scoring methodologies consider a wide array of factors and data points for every lender, offering, and financial solution.
Min. credit score

None

Fixed APR

27.00%

Variable APR

N/A

Overview

  • Minimum credit score: None.
  • Fixed APR: 27.00%.
  • Loan amounts: $3,000.
  • Repayment: 48 months.

Qualifications

  • Maintain a consistent source of income.
  • Must be at least 18 years of age.
  • Possess valid U.S. citizenship and a legitimate social security number.
  • Hold a current U.S. driver’s license or state-issued ID.
  • Keep an active bank account for direct deposit.
  • Satisfy any lender-specific criteria, such as credit rating, borrowing history, or place of residence.

Pros

  • No minimum credit score requirement allows accessibility for those with varied credit histories.
  • 48-month term provides clarity and allows for long-term financial planning.
  • Specific loan amount of $3,000 can meet many short-term financial needs.
  • Broad set of qualifications make the loan accessible to a wide range of people.
  • Emphasis on consistent income, not necessarily employment type, allows flexibility for borrowers.

Cons

  • A fixed APR of 27% is relatively high.
  • Loan amount is capped at $3,000, which might not cater to larger financial requirements.
  • Requirement of a U.S. driver’s license or state-issued ID could exclude some individuals.
  • Mandatory active bank account could be limiting for those who are unbanked.

Sallie Mae (Best for Good to Great Credit)

A name synonymous with student loans, Sallie Mae caters predominantly to those with commendable credit backgrounds. Recognizing the diverse financial needs of graduate students, they offer tailored loan products with competitive rates and flexible repayment terms. Even in the absence of Grad PLUS loans, Sallie Mae stands as a dependable financier for ambitious grad students.

Sallie Mae Undergraduate Student Loan

4.5
Stilt’s lender ratings reflect the findings and opinions of our editorial staff. Our scoring methodologies consider a wide array of factors and data points for every lender, offering, and financial solution.
Min. credit score

Mid-600's

Fixed APR

4.50-15.49%

Variable APR

6.37-16.70%

Overview

  • Minimum credit score: Mid-600’s.
  • Fixed APR: 4.50-15.49%
  • Variable APR: 6.37-16.70%
  • Loan amounts: Minimum of $1,000 per year.
  • Repayment: 10 to 15 years.

Qualifications

  • Typical credit score of approved borrowers or co-signers: Does not disclose.
  • Minimum income: Did not disclose.
  • Loan amounts: $1,000 up to 100% of the school-certified expenses.

Pros

  • One of the few lenders to provide loans to part-time students.
  • Non-U.S. citizens, including DACA students, can apply with a U.S. co-signer.

Cons

  • You can’t see if you’ll qualify and what rate you’ll get without a hard credit check.

College Ave (Best for Good Credit)

Renowned for its student-centric approach, College Ave offers tailored loan solutions for those possessing good credit scores. With transparent terms, competitive rates, and a simplified application process, they make the daunting task of securing educational finances a tad easier. For students unable to access Grad PLUS loans, College Ave emerges as a sound alternative, ensuring academic aspirations aren’t halted.

College Ave Private Undergraduate Student Loan

4.8
Stilt’s lender ratings reflect the findings and opinions of our editorial staff. Our scoring methodologies consider a wide array of factors and data points for every lender, offering, and financial solution.
Min. credit score

600 or better

Fixed APR

4.07% - 15.48%

Variable APR

5.59% - 16.69%

Overview

  • Minimum credit score: 600 or better.
  • Fixed APR: 4.07% – 15.48%..
  • Loan amounts: $1,000 – $150,000.
  • Repayment: 5, 8, 10, 15, and 20 years.

Qualifications

  • U.S. citizen or permanent resident.
  • For undergraduate loans: Part-time enrollment at an accredited college/university.
  • International students: Need a Social Security number and a co-signer.
  • For refinance loans: Must be 18 years or older.
  • For refinance loans: Graduation from an eligible school is required.

Pros

  • Prequalify with a soft credit check
  • Flexible repayment options
  • Offers co-signer release for private loans

Cons

  • Charges late fees
  • Must have graduated to be eligible to refinance
  • Half of repayment term must have passed to release co-signer

Final Thoughts

Graduate school is an investment in your future. While the costs might seem daunting, financial aids like Grad PLUS Loans can provide significant support. However, as with any loan, it’s crucial to understand the terms, be mindful of the amount you borrow, and plan for repayment. Good luck in your academic pursuits!

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Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.

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