As a result of the Higher Education Reconciliation Act (HERA) of 2005, graduate students are now eligible to borrow under the Federal PLUS Loan Program. This loan is called the Federal Graduate PLUS Loan. In order to be eligible for a Graduate PLUS Loan, students must complete and submit the Free Application for Federal Student Aid (FAFSA). Also, a Graduate PLUS loan borrower must not have an adverse credit history which is determined by a credit check conducted by the lender. If necessary, students may obtain a cosigner. Students may borrow up to the Cost of Attendance for the period of enrollment, minus other estimated financial assistance such as a Stafford Loan. Graduate PLUS Loans carry an origination fee of 2.5 percent.
What is the interest rate for Graduate PLUS Loans?
The interest rate for all Graduate PLUS Loans disbursed between July 1, 2007,and
June 30, 2008,will be fixed at 7.9 percent.
When do students begin repaying a Graduate PLUS Loan?
After students graduate, leave school or drop below half-time enrollment, they
will have six months before they must begin repayment of their loans. This period
of time is called a grace period. Students are granted one grace period. Students
may have longer than six months if they are on active duty in the military.
Similar to an Unsubsidized Stafford Loan [Grad Stafford.doc 3.3.2.2.1], the
Graduate PLUS Loan does accrue interest during the grace period. This interest
can either be paid or be capitalized.