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    Grad PLUS Loans: Before You Borrow

    Grad PLUS loans are federal student loans for graduate students. They have no annual or total borrowing limit, which makes these a good option for borrowers looking to cover a tuition gap.
    Updated: July 1, 2016

    What You'll Learn

    • What it takes to qualify for Grad PLUS loans.
    • The current interest rates on these loans.
    • Why it's smart to start repaying them while you're in school.

    A woman reading a book in the library

    The Highlights

    Who can borrow these loans?

    Students in graduate programs

    How much can I borrow?

    No annual or total limit

    What’s the current interest rate?

    6.31%

    Am I responsible for paying the interest?

    Yes

    Dig Into The Details

    Who Can Borrow These Loans?

    If you're a graduate or professional student, Grad PLUS loans may be able to help you bridge the gap between your financial aid award and the total cost of attendance at your school.

    You do not need to demonstrate financial need to borrow a Grad PLUS loan, but you still have to complete the Free Application for Federal Student Aid (FAFSA) to apply for this type of aid. You also need to have good credit and must be:

    • A U.S. citizen or eligible non-citizen.
    • Enrolled at least half time at an eligible institution.

    If you're denied a Grad PLUS loan due to poor credit, you can ask a family member or friend with good credit to co-sign it. You can also appeal the decision if you can document extenuating circumstances.

    How Much Can I Borrow?

    There's no annual or total borrowing limit for Grad PLUS loans—you just can't borrow more than the cost of attendance at your school, minus all of the other aid you have received.

    What's The Current Interest Rate?

    All Direct Grad PLUS loans made between July 1, 2016, and June 30, 2017, have an interest rate of 6.31%.

    For Direct Grad PLUS loans made between July 1, 2010, and June 30, 2013, the interest rate is 7.9%. Direct Grad PLUS loans made between July 1, 2013, and June 30, 2014, have an interest rate of 6.41%. Direct Grad PLUS loans made between July 1, 2014, and June 30, 2015, have an interest rate of 7.21%. And Direct Grad PLUS loans made between July 1, 2015, and June 30, 2016, have an interest rate of 6.84%. Federal Family Education Loan Program (FFELP) Grad PLUS loans made between July 1, 2006, and June 30, 2010, have an interest rate of 8.5%.

    Am I Responsible For Paying The Interest?

    Yes. Grad PLUS loans are not subsidized, which means that you're responsible for paying any interest that accrues over the entire lifetime of the loan.

    Interest begins accruing on these loans when they are disbursed. You may postpone payments with an in-school deferment while you're enrolled at least half time. However, interest will continue to accrue on your loans during this time. When your loan goes into repayment, the interest capitalizes (gets added to your principal balance)—so you'll have to pay interest on the capitalized amount as well as your initial loan balance.

    You can make monthly or quarterly interest payments on these loans. If you do so while you're still in school, you can prevent or reduce the capitalization.

    Be Money Smart

    Here's a little more info about how much you could save by making just interest-only payments while you're in school.

    Let's say you borrowed a $20,000 Grad PLUS loan with a 6.31% interest rate. After you have been in school for 2 years, about $2,309 worth of interest would be added to the debt, making the new balance $22,309 when it enters repayment.

    If you paid that amount off using the standard 10-year, 120-payment plan, the $20,000 loan ends up costing about $30,126. But, if you pay the interest while in school, the total bill after 10 years would be over $3,000 lower!

    Want to learn more about repaying Grad PLUS loans? Check out this article. If you decide to apply, you'll need to fill out the FAFSA.

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