What is a Grad PLUS loan?

A Grad PLUS Loan is a federal student loan issued by the U.S. Department of Education specifically for graduate and professional students to cover education costs not met by other financial aid. Unlike other federal loans, they require a credit check and allow you to borrow up to the full cost of attendance.

For families, Grad PLUS loans affect long-term financial planning and may involve parents as endorsers; for students, this is about managing total graduate debt and understanding borrowing options beyond Unsubsidized loans. While they offer the safety net of federal protections—such as income-driven repayment and forgiveness programs—they also carry higher interest rates and fees than Direct Unsubsidized Loans. Understanding exactly how they work is critical before signing the Master Promissory Note.

By the end of this guide, you’ll be able to:

• Determine if you are eligible for a Grad PLUS loan based on credit and enrollment status.
• Understand the current costs (interest rates and fees) and how they compare to other federal options.
• Navigate the application process from filing the FAFSA to receiving funds.
• Evaluate repayment and forgiveness options available for Grad PLUS borrowers.

Many students assume that federal loans are automatically the best choice for every dollar borrowed, but Grad PLUS loans occupy a unique middle ground between standard federal aid and private financing. Knowing when to utilize them is the first step in building a smart funding strategy.

Context: when Grad PLUS loans make sense

Grad PLUS loans are designed as a gap-filling measure for graduate and professional students who have exhausted their primary federal aid but still face outstanding tuition or living expenses. They are particularly common for students in high-cost professional programs, such as law school, medical school, or MBA programs, where the total cost of attendance often exceeds standard lending limits.

The strategic role of a Grad PLUS loan is simple: it should be your second option for federal borrowing, never your first. According to StudentAid.gov, graduate students are limited to borrowing $20,500 annually in Direct Unsubsidized Loans. Since tuition and living expenses often exceed this amount, the Grad PLUS loan allows you to borrow the remaining difference, up to the school’s full cost of attendance.

The key trade-off is cost versus capacity. While Grad PLUS loans offer higher borrowing limits than Unsubsidized loans, they come with higher interest rates and origination fees. However, unlike private loans, they retain federal benefits like Public Service Loan Forgiveness (PSLF) and flexible deferment options. This makes them a vital tool for students entering lower-paying public service fields who need to borrow high amounts but plan to utilize forgiveness programs.

Before applying, you must ensure you meet the specific federal criteria required to access these funds. For a broader look at federal options, review our Federal Loans overview.

Grad PLUS loan eligibility requirements

Eligibility for Grad PLUS loans is generally more lenient than private lending standards, but there are strict federal requirements you must meet. Unlike undergraduate Direct Loans, which are guaranteed regardless of credit history, Grad PLUS loans require a credit check.

To qualify, you must be enrolled at least half-time in an eligible graduate or professional degree program at a school that participates in the Direct Loan Program. You must also meet the general eligibility requirements for federal student aid, which include being a U.S. citizen or eligible noncitizen, having a valid Social Security number, and maintaining satisfactory academic progress.

The FAFSA requirement
You cannot apply for a Grad PLUS loan without first completing the Free Application for Federal Student Aid (FAFSA). The FAFSA determines your eligibility for all federal aid and must be on file for the academic year in which you wish to borrow.

The credit requirement
The most distinct requirement for Grad PLUS loans is the absence of an “adverse credit history.” This does not mean you need a high credit score; rather, you must not have specific negative marks on your credit report. According to StudentAid.gov, adverse credit includes having accounts with a total combined outstanding balance greater than $2,085 that are 90 or more days delinquent or charged off in the past two years. It also includes significant negative events within the last five years, such as default, bankruptcy, repossession, foreclosure, or wage garnishment.

Decision: am I eligible?
Use this checklist to quickly assess your standing:

• Enrolled at least half-time in a graduate/professional program?
• School participates in the Direct Loan Program?
• Filed FAFSA for the current academic year?
• U.S. citizen or eligible noncitizen?
• No adverse credit history (or willing to obtain an endorser)?

If you checked all the boxes, you are likely eligible to borrow. If you are concerned about the credit check, the next section details exactly how that process works and your options if you don’t pass.

Credit check requirements and options if you don’t pass

The credit check for a Grad PLUS loan is triggered automatically when you submit your application on StudentAid.gov. Unlike private lenders that use tiered interest rates based on credit scores (FICO), the federal credit check is pass/fail. Your credit score does not affect your interest rate; everyone who qualifies receives the same fixed rate established by Congress for that academic year.

As mentioned previously, the Department of Education looks specifically for “adverse credit history.” If your credit report shows delinquencies exceeding the federal threshold or major derogatory events like bankruptcy, your application will be initially denied. However, a denial is not necessarily the end of the road. Students have three primary paths to secure funding if they do not pass the initial check.

1. Obtain an endorser
An endorser is similar to a co-signer on a private loan. This person must not have an adverse credit history and agrees to repay the Grad PLUS loan if you do not. If you have a family member or friend willing to support your education, this is often the fastest way to reverse a denial. For more details on how this relationship works, read our guide on cosigners and student loans.

2. Document extenuating circumstances
If your adverse credit history is due to events beyond your control—such as a divorce, medical emergency, or job loss—you can submit documentation to the Department of Education. If your appeal is accepted, you may be approved for the loan without an endorser.

3. Complete PLUS credit counseling
If you qualify via an endorser or by documenting extenuating circumstances, you must complete PLUS Credit Counseling. This is a short, online module on StudentAid.gov designed to ensure you understand the obligations of taking on this debt.

Passing the credit check clears the hurdle for eligibility. The next logical step is determining exactly how much you should borrow.

Decision: Direct Unsubsidized vs. Grad PLUS – which first?

Strategic borrowing can save you thousands of dollars in interest over the life of your loans. The golden rule of graduate financing is to maximize your Direct Unsubsidized Loans before touching Grad PLUS loans.

Why borrow Unsubsidized first?
Direct Unsubsidized Loans carry lower interest rates and lower origination fees than Grad PLUS loans. Furthermore, they do not require a credit check. As noted in the Context section, graduate students can borrow up to $20,500 per year in Unsubsidized loans. According to StudentAid.gov, there is also an aggregate lifetime limit of $138,500 (which includes loans taken for undergraduate study). You should only consider Grad PLUS loans once you have hit the $20,500 annual cap.

Grad PLUS loans are meant to fill the gap between that $20,500 limit and your school’s official Cost of Attendance (COA). While there is no aggregate lifetime limit for PLUS loans, you cannot borrow more than the COA minus other financial aid.

Source: StudentAid.gov (limits for graduate students, 2024-2025 academic year). Note: See Rates and Fees section below for current interest rate and origination fee comparison.

Decision checklist: your borrowing strategy

1. Calculate Total Cost: Determine your tuition, fees, and living expenses (COA).
2. Subtract Free Aid: Deduct any scholarships, grants, or fellowships.
3. Maximize Unsubsidized: Borrow the full $20,500 in Direct Unsubsidized Loans.
4. Calculate the Gap: Identify the remaining amount needed.
5. Apply for Grad PLUS: Borrow only what is necessary to cover the remaining gap.

If you have maxed out your Unsubsidized eligibility and still have a gap, compare private rates to your PLUS offer. Compare rates from 8+ lenders.

Current interest rates and origination fees

Understanding the cost of borrowing is essential because Grad PLUS loans are among the most expensive federal loan options. Unlike private loans, where rates vary by credit score, federal rates are fixed by Congress each year.

Interest rates
According to StudentAid.gov, for loans disbursed between July 1, 2024, and June 30, 2025, the interest rate for Grad PLUS loans is 9.08% (fixed). By comparison, the rate for Direct Unsubsidized Loans for graduate students during the same period is 7.05%. This 2% difference underscores why maximizing Unsubsidized loans first is financially prudent.

Origination fees
In addition to interest, federal loans carry an origination fee—a percentage of the loan amount deducted before the funds are sent to your school. According to StudentAid.gov, for loans disbursed between October 1, 2024, and September 30, 2025, the Grad PLUS origination fee is 4.228%. This is significantly higher than the 1.057% fee for Unsubsidized loans.

Because the fee is deducted proportionally, if you borrow $10,000 in Grad PLUS loans, the government keeps approximately $422.80. Your school receives $9,577.20, but you are responsible for repaying the full $10,000 plus interest.

Source: StudentAid.gov (rates for disbursements July 1, 2024–June 30, 2025; fees for disbursements October 1, 2024–September 30, 2025)

Have strong credit or a creditworthy cosigner? Before finalizing your Grad PLUS loan, it’s worth comparing private graduate loan rates to see if you can secure a lower APR. Check your rate in 2 minutes.

How interest accrues during school

One of the most important financial concepts to grasp with Grad PLUS loans is that they are “unsubsidized.” This means interest begins accruing the moment the loan funds are disbursed to your school. There is no federal subsidy paying your interest while you are in class.

Interest accumulates during your in-school deferment, your post-graduation grace period, and any other periods of forbearance. While you are not required to make payments while enrolled at least half-time, the interest is growing in the background. When your repayment period officially begins, this unpaid interest may be “capitalized,” meaning it is added to your principal loan balance. Future interest is then charged on this new, higher amount.

Ideally, you should plan to pay at least the accruing interest while studying to prevent your balance from ballooning. Once you understand the costs, the actual application process is straightforward.

How to apply for a Grad PLUS loan

Applying for a Grad PLUS loan is a digital process managed through the Federal Student Aid website. It is distinct from the initial FAFSA application but relies on the data you provided there.

Step-by-step application guide

1. Complete the FAFSA: If you haven’t already, file your FAFSA. This is the prerequisite for all federal aid. (See our FAFSA guide for help).
2. Log In: Go to StudentAid.gov and log in using your FSA ID (the same username and password used for the FAFSA).
3. Select Application: Under the “Loans and Grants” menu, select “PLUS Loans: Grad PLUS and Parent PLUS,” then choose the option for “Graduate/Professional Student.”
4. Authorize Credit Check: You will be asked to provide personal information and authorize the credit check. Results are typically immediate.
5. Sign the MPN: If approved, you must complete a Master Promissory Note (MPN) for Direct PLUS Loans. This legal document commits you to repaying the loan. A single MPN can cover all PLUS loans you take out for up to 10 years at the same school.
6. School Certification: The Department of Education notifies your school. The school’s financial aid office will certify the loan amount based on your remaining eligibility within the Cost of Attendance.
7. Disbursement: Funds are sent directly to your school, usually at the start of each semester. The school deducts tuition and fees, and any remaining money is refunded to you for living expenses.

Timeline for applying
You should apply after you have received your financial aid award letter and determined your funding gap. Try to complete the application 2–3 weeks before your tuition deadline to allow for processing. Remember, the credit check is valid for 180 days, so applying too early (like in January for a fall start) may require a second credit pull.

Key loan terms: repayment period, grace period, and deferment

Before repayment begins, it is vital to understand the timeline and terms governing your loan. Grad PLUS loans offer specific protections that help borrowers transition from school to the workforce.

The grace period
Grad PLUS loans come with a six-month grace period. This means you are not required to make payments for six months after you graduate, leave school, or drop below half-time enrollment. According to StudentAid.gov, this grace period is now a standard feature for PLUS loans; previously, borrowers had to manually request a deferment to align with other federal loans. Interest will still accrue during these six months.

In-school deferment
As long as you are enrolled at least half-time in an eligible program, your Grad PLUS loans are automatically placed into “in-school deferment.” You do not need to make payments, though you can choose to do so to manage interest.

Repayment timelines
Once your grace period ends, your repayment timeline depends on the plan you choose. Under the Standard Repayment Plan, the term is 10 years. However, according to StudentAid.gov, if you have more than $30,000 in Direct Loans, you may qualify for Extended Repayment, which stretches the term up to 25 years to lower monthly payments (though this increases total interest paid).

Beyond standard terms, Grad PLUS loans grant access to income-driven options, which can be crucial for managing high balances.

Available repayment plans for Grad PLUS loans

Federal loans offer flexibility that private loans rarely match. Choosing the right repayment plan can make the difference between an affordable monthly budget and financial stress.

Standard and graduated plans
The Standard Repayment Plan splits your balance into fixed monthly payments over 10 years. This results in the highest monthly bill but the lowest total interest cost. The Graduated Repayment Plan starts with lower payments that increase every two years, also paid off over 10 years—ideal if you expect your income to rise quickly.

Income-driven repayment (IDR)
IDR plans base your monthly payment on your discretionary income and family size, rather than your total debt.

• Income-Contingent Repayment (ICR): Grad PLUS loans are directly eligible for this plan. According to StudentAid.gov, payments are generally 20% of your discretionary income or what you would pay on a fixed 12-year plan, whichever is less.
• SAVE Plan & Other IDR Options: As of the 2024-2025 academic year, the SAVE Plan (formerly REPAYE) faces legal challenges. Borrowers should check StudentAid.gov for the most current status on enrollment and blocked features. Generally, to access plans like IBR (Income-Based Repayment), you may need to consolidate your loans.

Consolidation
You can combine multiple federal loans into a single Direct Consolidation Loan. This is often necessary to make older federal loans eligible for newer IDR plans or PSLF. Learn more in our guide to consolidation.

Loan forgiveness eligibility for Grad PLUS borrowers

For many graduate students, especially those entering fields like social work, education, medicine, or law, loan forgiveness is a major factor in choosing federal loans over private ones.

Public Service Loan Forgiveness (PSLF)
Grad PLUS loans are fully eligible for PSLF. According to StudentAid.gov, this program forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer (typically government or 501(c)(3) nonprofits). Since graduate school debt can be substantial, PSLF is often the most effective way to manage large Grad PLUS balances.

IDR forgiveness
Even if you do not work in public service, you may be eligible for forgiveness through Income-Driven Repayment plans. Depending on the plan, any remaining balance is forgiven after 20 or 25 years of payments. However, unlike PSLF, this forgiven amount may be treated as taxable income depending on current tax laws.

According to Sandy Baum, higher education finance expert, “Borrowing is not inherently bad; the question is how much, and under what terms.” For students planning a career in public service, the “terms” of a Grad PLUS loan—specifically PSLF eligibility—can make borrowing larger amounts financially viable in the long run.

For a detailed breakdown of these programs, read our PSLF guide.

Frequently asked questions about Grad PLUS loans

Grad PLUS loans are a powerful tool for financing advanced degrees, offering high borrowing limits with the safety net of federal protections. However, their higher interest rates and fees mean they should be used strategically.

• Prioritize Unsubsidized Loans: Always exhaust your $20,500 Direct Unsubsidized limit first to secure lower interest rates and fees.
• Understand the Cost: Be aware of the 9.08% interest rate and 4.228% origination fee for loans disbursed between July 1, 2024, and June 30, 2025, when calculating your total repayment.
• Know Your Credit Status: A credit check is required, but options exist for those with adverse credit history.
• Plan for Repayment: Utilize the six-month grace period and consider income-driven plans if you pursue public service careers.

Your next steps:

1. File or update your FAFSA for the current academic year.
2. Review your financial aid award letter to see your Unsubsidized loan offer.
3. Calculate your remaining funding gap by subtracting aid from your Cost of Attendance.
4. Apply for a Grad PLUS loan at StudentAid.gov only for the amount you truly need.

If you’ve exhausted federal options and still have a funding gap, comparing private graduate loan rates can help you find the best overall financing package. Compare rates from 8+ trusted lenders—used by over 50,000 students and families to find competitive options.

References and resources

For official information and application portals, consult these government resources:

• StudentAid.gov Grad PLUS Application – The official portal to apply for your loan.
• StudentAid.gov Repayment Plans – Detailed comparisons of all federal repayment options.
• PSLF Help Tool – Verify if your employer qualifies for Public Service Loan Forgiveness.
• Federal Student Aid Information Center – Contact information for specific questions about your aid package.