Potentially eligible Grad PLUS borrowers are those who are enrolled at least half-time in a graduate or professional program (for example, a program that leads to a Master’s Degree or to a law or medical degree). Students taking courses required for teacher certification or for admission into a graduate or professional program are not eligible for a Direct PLUS Loan.

In this document, we cover information in the following order:

  • Terms and Conditions Applicable to Parent PLUS Borrowers and Grad PLUS Borrowers

  • Terms and Conditions Applicable Only to Grad PLUS Borrowers
     

Terms and Conditions Applicable to Parent PLUS Borrowers and Grad PLUS Borrowers

The terms and conditions of Direct PLUS Loans made to Grad PLUS borrowers are the same as those that apply to Direct PLUS Loans made to parents of dependent undergraduates. These terms and conditions include the following:

  • A Grad PLUS borrower must not have an adverse credit history. To determine whether a borrower has an adverse credit history, a credit check must be completed. All other requirements concerning determinations of adverse credit also apply.

As is the case with parent PLUS applicants, a Grad PLUS applicant who is determined to have an adverse credit history may receive a Direct PLUS Loan if he or she obtains an endorser who does not have an adverse credit history.

Note: A Grad PLUS applicant who is determined to have an adverse credit history is not eligible to borrow any additional Federal Direct Unsubsidized Loan (Direct Unsubsidized Loan) amounts in excess of the regular annual loan limit for a graduate or professional student or, for certain health professions students, the increased Direct Unsubsidized Loan annual loan limit.

  • The repayment period for a Direct PLUS Loan made to a Grad PLUS borrower begins on the date of the final disbursement of the loan, and the first payment is due within 60 days after the date the loan is fully disbursed. Of course, a Grad PLUS borrower may receive a deferment while he or she is enrolled on at least a half-time basis at an eligible school. Upon dropping to less than half-time enrollment status, the borrower is not entitled to a grace period on his or her Direct PLUS Loans.

Note: A Grad PLUS borrower must apply for an in-school deferment—deferment eligibility will not be determined automatically, as is possible with Federal Direct Subsidized Loans (Direct Subsidized Loans) and Direct Unsubsidized Loans. The Grad PLUS borrower may apply for an in-school deferment by submitting an In-School Deferment Request to the Direct Loan Servicing Center.

When a school certifies a Grad PLUS borrower’s eligibility for deferment, it should be certain to include the Grad PLUS borrower’s anticipated graduation date. It is this date that will be used to determine when the borrower’s in-school deferment period ends.

  • The interest rate on a Direct PLUS Loan for Grad PLUS borrowers is the same fixed rate as that for parent PLUS borrowers.
  • The loan fee on a Direct PLUS Loan for Grad PLUS borrowers is the same fee as that for parent PLUS borrowers: 4 percent of the principal amount of each loan the borrower receives.
  • Grad PLUS borrowers will receive the same opportunities for repayment incentive programs as parent PLUS borrowers. One such program that is currently available to parent PLUS borrowers, the up-front interest rebate, will also be available to Grad PLUS borrowers. This up-front interest rebate for Direct PLUS Loans is equal to 1.5 percent of the principal amount of each loan the borrower receives.
  • As is the case with Direct PLUS Loans made to parent borrowers, there is no fixed annual loan limit on Direct PLUS Loans for Grad PLUS borrowers. Grad PLUS borrowers may borrow up to the cost of attendance for the period of enrollment, minus other estimated financial assistance (EFA) received for that period. EFA includes Direct Subsidized Loan and/or Direct Unsubsidized Loan amounts that the graduate or professional student may receive for that period of enrollment.
  • If a Grad PLUS borrower is also a parent who is borrowing a Direct PLUS Loan for one or more dependent students, the borrower must sign one Federal Direct PLUS Loan Application and Master Promissory Note ( PLUS MPN) to borrow for himself or herself and a separate PLUS MPN to borrow for each dependent student.
  • The rules for multi-year use and expiration of the PLUS MPN are the same for both parent PLUS and Grad PLUS borrowers.
    • A school must use and document an active confirmation process for new Direct PLUS Loans made under a previously signed PLUS MPN.
    • A Grad PLUS borrower may choose to sign a new PLUS MPN for each new loan period even if that would not otherwise be required.
    • A school may also require a new PLUS MPN before making a new Direct PLUS Loan to the Grad PLUS borrower.
  • As is the case with Direct PLUS Loans made to parent borrowers, the Grad PLUS borrower must provide the school with the requested Direct PLUS Loan amount. The school must originate the Direct PLUS Loan for the lesser of the maximum amount for which the student is eligible or the amount requested by the Grad PLUS borrower.
  • A graduate or professional student who borrows a Direct Subsidized Loan and/or Direct Unsubsidized Loan may borrow a Federal PLUS Loan through the Federal Family Education Loan (FFEL) Program for the same period of enrollment. Likewise, a graduate or professional student who borrows a subsidized or unsubsidized Federal Stafford Loan through the FFEL Program may borrow a Direct PLUS Loan for the same period of enrollment.
  • Initial (entrance) and exit counseling are not required for Direct PLUS Loan borrowers, including Grad PLUS borrowers. However, for students who borrow Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans, a school is encouraged to include appropriate information about Direct PLUS Loans in the required exit counseling for Direct Subsidized Loan/Direct Unsubsidized Loan borrowers.
  • As is the case with Direct PLUS Loans made to parent borrowers, Direct PLUS Loans made to Grad PLUS borrowers will not be included in the calculation of a school’s cohort default rate.
    In addition to the above requirements, a Grad PLUS borrower is subject to all Title IV student eligibility requirements.

 

Terms and Conditions Applicable Only to Grad PLUS Borrowers

The following additional requirements that apply only to Direct PLUS Loans made to graduate or professional students:

  • All Grad PLUS applicants must complete and submit the Free Application for Federal Student Aid (FAFSA) before applying for a Direct PLUS Loan.
  • Before applying for a Direct PLUS Loan, a graduate or professional student must also apply for and the school must determine the student's eligibility for the maximum annual Direct Subsidized Loan and/or Direct Unsubsidized Loan amounts. We expect that a Grad PLUS applicant would wish to receive a Direct PLUS Loan to supplement the maximum Direct Subsidized Loan and/or Direct Unsubsidized Loan amounts that he or she is eligible to receive. However, a graduate or professional student is not required to receive Direct Subsidized Loan and/or Direct Unsubsidized Loan funds as a condition for receiving a Direct PLUS Loan, and a school may not require a graduate or professional student to receive Direct Subsidized Loan and/or Direct Unsubsidized Loan funds before the student may apply for a Direct PLUS Loan.

If the graduate or professional student declines Direct Subsidized Loan and/or Direct Unsubsidized Loan amounts for which he or she is eligible, the Direct Subsidized Loan and/or Direct Unsubsidized Loan amounts that the student could have received are not counted as EFA when determining the Direct PLUS Loan amount the student may borrow for that period of enrollment.