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Direct PLUS Loans for Graduate/Professional Students

February 26, 2021

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Direct PLUS Loans are loans for graduate students who have additional financial need beyond what the Direct Unsubsidized Loan covers. In most cases, borrowers are encouraged to use federal loans before turning to private loans

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What is a Direct PLUS Loan?

Direct PLUS Loans are federal unsubsidized loans for graduate and professional students. The same terms and conditions of the parent PLUS Loan apply to the Direct PLUS Loan; however, this loan is in the student’s name. Medical school students may borrow up to the medical school’s cost of attendance, minus other estimated financial assistance. Like Direct Unsubsidized Loans, Direct PLUS Loans are relatively low cost, and are available through the federal government’s Direct Loan program.

How is Eligibility Determined?

To apply for a Direct PLUS Loan, you must first complete the FAFSA and apply for the annual maximum Direct Unsubsidized Loan. To be eligible for a PLUS Loan, you must be enrolled at least half-time in a program leading to a professional or graduate degree. To apply for the loan, you will generally complete and sign a Master Promissory Note (MPN) electronically or complete a paper application (check with your school). First time PLUS Loan borrowers will also need to complete entrance counseling.

The financial aid office determines how much you can borrow by subtracting your other estimated financial assistance (loans, grants, scholarships, and other aid) from the cost of attendance set by the school. Any remaining balance is what could be covered through a Direct PLUS Loan. The financial aid office staff will certify your eligibility for the PLUS Loan.

Benefits of Direct PLUS Loans

Since Direct PLUS Loans are federally guaranteed, they share some of the same program regulatory protections as Direct Unsubsidized Loans. They offer deferment and forbearance options, various repayment plans, and in the event of death or disability, can be forgiven.

If the borrower chooses, a Direct PLUS Loan can be consolidated after graduation into a Direct Consolidation Loan. A Direct Consolidation Loan can help simplify repayment by combining all federal loans into one new loan, extending the term of the loan, and possibly lowering the monthly payment amount. Keep in mind though, the longer it takes to pay off your loan(s), the more it will cost overall, and consolidation isn’t always necessary. To find out if consolidation is right for you, take this quiz.

Another benefit of Direct PLUS Loans is that they are eligible for Public Service Loan Forgiveness (PSLF), either when consolidated or in their original form. Review the Public Service Loan Forgiveness Fact Sheet and the PSLF booklet for more information.

Interest and Fees

Direct PLUS Loan interest rates are set by the federal government. The law dictates that loans disbursed after July 1, 2013 will have a variable/fixed interest rate. This means that interest rates on Direct PLUS Loans will be adjusted annually on July 1st. When the loan is disbursed, the interest rate will be fixed.

The interest rate will remain fixed for the life of the loan. Depending on when the PLUS Loan is disbursed, borrowers may have multiple PLUS Loans with different interest rates. To view current and historical PLUS Loan interest rates, visit the Federal Student Aid website.

Just like a Direct Unsubsidized Loan, a Direct PLUS Loan has an associated loan fee. This fee is charged prior to loan disbursement. Current fees can be viewed on the Federal Student aid website.

Deferring Repayment

The Direct PLUS Loan goes into repayment after the full loan is disbursed; however, an automatic in-school deferment is applied. This means that if the borrower is enrolled at least half-time, no payments are required while in school. Additionally, at graduation a six-month post-enrollment deferment is granted so borrowers don’t have to begin repayment immediately.

Direct PLUS Loan Benefits:

  • Can fill the gap between a medical school's cost of attendance and the borrower's Direct Unsubsidized Loan eligibility.
  • Can be included in a Direct Consolidation Loan.
  • Is eligible for PSLF.
  • Offers deferment while in-school, and an automatic six-month post-enrollment deferment after graduation.

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