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A Direct PLUS Loan is a federal loan available for graduate or professional degree students and dependent undergraduate students’ parents to help pay for education expenses. A Direct PLUS Loan is referred to as a Grad PLUS loan when given to a graduate or professional student and a parent PLUS loan when given to a parent.
The interest rate is fixed for the life of the Direct PLUS loan. It is 6.28% for loans first disbursed on or after July 1, 2021, and before July 1, 2022. This rate is a fixed interest rate for the life of the loan.
Direct PLUS Loans also include loan fees (calculated as a percentage of the loan amount) proportionately deducted from each loan disbursement. The percentage varies depending on the date the loan is first disbursed.
This type of loan is offered to graduates and professional students to pay for their education. Grad PLUS Loans allow graduate students to cover any costs uncovered by other financial grants or aid, up to the total cost of attendance. The maximum PLUS loan amount you can borrow is the difference between the cost of attendance and any other financial assistance you receive.
You must meet specific eligibility criteria to receive a Grad PLUS loan. They include:
You can use the Direct PLUS Loan application to apply for a Grad PLUS Loan. The same application can also authorize the school to use funds to change the loan amount specified in a previously submitted PLUS Loan application or satisfy other educationally related charges.
The information that is provided on the application will be sent to the school that you select. The school will use the information to determine your eligibility for a Grad PLUS Loan.
You must lift or remove the security freeze on a credit file (if any) before continuing with the application, failing to which the application will not be processed.
You need not start making payments for six months after you leave school, graduate, or drop below half-time enrollment. Once the loan enters the repayment phase, the chosen loan servicer will notify when the first payment is due.
You can repay loans through any of the repayment plans available. Generally, students have 10 to 25 years to repay the loan, depending on the repayment plan they choose.
Note that the interest will accumulate on loan during any period you are not required to make any payments. You may allow the interest to be capitalized when you begin making payments or pay the accumulated interest.
If you are a dependent, your parents can apply for the Parent PLUS Loans to cover educational costs uncovered by the student’s financial aid, up to the total cost of attendance. This type of loan is the financial responsibility of the parents. The maximum PLUS loan amount that you can borrow is the difference in the cost of attendance at the school you will attend and any other financial aid.
Parents should meet specific requirements to receive a Direct parent PLUS loan. They include:
Your parents can usually apply for a loan by filling out the Direct parent PLUS loan application online. However, some schools may have different application processes. When parents select your school from the list, the webpage will notify if the selected school has a different application process. In such cases, your parents should check with the school’s financial aid office regarding the application process.
You (dependent student) must fill out the FAFSA form before your parents apply for a Parent PLUS loan.
Your parents need not make payments while you are enrolled at least half-time and for an extra six months after you leave school, graduate, or drop below half-time enrollment, provided a request for postponement is placed. If a deferment request is not placed, parents will have to start making payments after the loan is fully disbursed.
The interest will accrue on loan during any period a parent is not required to make payments. The parent may allow the interest to be capitalized when they begin making payments or paying the accumulated interest.
Eligible parents must sign a Direct PLUS Loan Master Promissory Note (MPN) agreeing to the loan terms. If a parent is taking loans for more than one child, they must sign separate Direct PLUS Loan MPNs for the loans received for each child.