Graduate Student Loans (PLUS) in a Nutshell

Much of the time, when the discussion turns to college, the focus is on undergraduate study and undergraduate study only. However, graduate students have bills to pay as well. And since graduate or professional school is quite expensive, getting reliable financing is very important.

The Federal Graduate PLUS Loan is a type of loan available only to students pursing a professional or graduate degree. This type of PLUS loan is guaranteed by the government and provides very low interest rates. Unlike the Federal PLUS Loan for Parents, however, graduate students can borrow in their own names and will receive the benefits of building excellent credit with a federal loan.

The Benefits of Federal Graduate Student Loans

The benefits of PLUS loans are numerous and varied, so it is important we discuss each in detail.

  • The total cost of education can be borrowed. Your tuition, books, lab fees and other expenses can be taken into account here. You can borrow up to the cost of your education, less any other financial aid you have received, that is.
  • Not based on need. The GradPLUS Loan is not based on need. Rather, it is based on your credit history. This means, that anyone with decent credit and a desire to receive assistance in paying for college can have it.
  • Fixed interest rate. A fixed interest rate of 8.5% makes sure that once you begin repaying your loan, you can count on affordable monthly payments and an expected level of interest.
  • No collateral is needed. The credit check performed for the GradPLUS Loan is pretty light, so you do not need to have any collateral in order to qualify.
  • You can defer the loan repayment while you are in college. Just like other federal loans, you can defer any and all payments until you graduate from college. Of course, you will be responsible for the interest that accrues on your principal, but you can always get a student loan consolidation at a better rate!
  • Any interest that you pay may be tax deductible. Student loans have a special attribute that makes it so you can, in many cases, deduct the interest you’ve paid that year on your taxes.

How Can I Apply for this type of loan?

As with all federal aid, you need to file the FAFSA in order to even be considered for the GradPLUS loan. Once the FAFSA is filed, you will receive a SAR or Student Aid Report in the mail, which will detail the amount of money you are expected to contribute to your education. Next, you will receive your award letter. If you have qualified for any federal financial aid, you will receive an award letter that explains your options in detail. It is in this letter that you should notice qualification for the GradPLUS Loan. If you have qualified, indicate on the award letter you will be accepting this form of aid and return it.

Next, you will need to submit a promissory note stating that you agree to the terms of the loan. If you are borrowing directly through the federal government, you will file this with the Department of Education and your school.

Then there you go! The money you are then entitled to will be sent directly to your school of choice and set against the total tuition balance. If anything is left over it can be used for the cost of books and other education related expenses. Federal loans really are the best way to pay for college, not counting grants, that is. So if you find that you qualify for a graduate student loan and have a need for the cash, why not apply?