What is a Grad PLUS loan?
The PLUS Loan for Graduate and Professional Degree students, also known as the Grad PLUS Loan, is a federal loan available for you to borrower up to the cost of attendance minus any financial aid awarded.
What are the Terms and Conditions of the Grad PLUS loan?
• You must pass a credit check to be eligible for a Grad PLUS Loan
• You must be a U.S. citizen or national, a U.S. permanent resident, or an eligible non-citizen
• You must be attending school at least half-time
• You must apply for the annual loan maximum under the Federal Direct Unsubsidized Loan Program
• You must file a FAFSA
• There are no pre-payment penalties• You may be eligible for deferment and forbearance options
What is the interest rate on the Grad PLUS loan?
The Grad PLUS loan has a fixed interest rate which is set for new loans every July 1st, and does not change over the life of the loan. The rate for loans certified between July 1st, 2013 and June 30th, 2014 is 6.41%.
Are there any additional fees for the Grad PLUS loan?
The U.S. Department of Education charges a loan fee of 4% of the principal amount of each Direct Grad PLUS Loan. This fee is deducted proportionately from each disbursement of your loan.
What is a Master Promissory Note?
MPN stands for Master Promissory Note.
The Master Promissory Note is a binding legal document between you and the lender.
By signing the MPN, you are agreeing to all of the terms and conditions set forth by the lender. These terms and conditions include the interest rate as well as deferment and cancellation conditions.
Signing the MPN also enables you to receive multiple loans in different academic years under the same program.
When do I begin repaying my Grad PLUS loan?
Generally, the first payment is due within 60 days after the loan is fully disbursed. There are no grace periods for Grad PLUS Loans. The interest will begin accruing immediately at the time the first disbursement is made.
You may defer payment while you are enrolled at least half-time. If your Direct Grad PLUS loan was first disbursed on, or after, July 1, 2008 you may also defer payment for an additional 6 months after you are no longer enrolled at least half-time.
What will my monthly payments be on my Grad PLUS loan?
Your monthly repayment amounts will vary depending on the total amount of your loans. The following repayment chart will provide you with some repayment examples.
What are my repayment options?
Direct Grad PLUS loan borrowers have many repayment plan options which include:
• Standard Repayment
• Extended Repayment
• Graduated Repayment
• Income Contingent Repayment
• Income-Based Repayment
For more information about these repayment plans, please visit the Direct Loan servicing site: http://www.direct.ed.gov/RepayCalc/dlindex2.html
What does it mean to consolidate a federal loan?
If you have multiple federal student loans, you may determine that you want to combine them into one loan.
This combined loan is called a consolidated loan.
If your federal loans are in a grace period or in repayment, you may be eligible to consolidate your student loans.
When you consolidate multiple loans into one loan, a few things will happen.
The new loan will have a fixed interest rate.
The new loan will enable you to make a single student loan payment each month (instead of the multiple payments you had been making).
Your monthly payment will be lower (however, you will pay more in total interest by doing this).
If you do combine more than one student loan, the amount you owe on each loan is added together and the interest rate is recalculated.
The new interest rate is equal to the weighted average of all the loans being consolidated.
This new interest rate will be fixed, meaning that the interest rate will never change again.
Before you consolidate your federal student loans, be sure to determine whether it makes sense to do so.
In some cases consolidation is a prudent course of action. In others, it is not.
What does deferment mean?
If a borrower returns to college, or is unemployed for an extended period of time, or is on active military duty, he or she may request that their loans be placed on deferment.
A lender does not have to grant deferment. But if the lender does grant a deferment, the borrower can temporarily postpone repaying a loan.
What does forbearance mean?
If a borrower is experiencing financial hardship due to reasons outside of his or her control (for example, illness or underemployed), he or she may request of their lender a temporary delay in paying back the loan.
If the lender approves the request, the borrower will be given temporary relief on the principal payments. This is known as forbearance.
However, interest charges will still be incurred and will be added to the total balance due.
How do I apply for a deferment or forbearance on my Grad PLUS Loan?
How do I apply for a deferment or forbearance on my Grad PLUS Loan?
If you are enrolled in school at least half-time, you are eligible for an in-school deferment on your student loan.
Your school will communicate your enrollment status to the student loan clearing house where your loan servicer can access this information and grant you an in-school deferment.
You will need to communicate with your servicer to ensure your deferment is processed; do not make an assumption that it has been applied.
You may also obtain a deferment request form from your school, or by contacting your loan servicer.
If you do not know who your servicer is, you can go to the National Student Loan Data System website where you can retrieve this information: www.nslds.ed.gov
If you are unable to make payments on your Grad PLUS Loan after you leave school you may request a forbearance.
To review forbearance options, contact your servicer or go to the studentaid.ed.gov website at: http://studentaid.ed.gov/repay-loans/deferment-forbearance#how-do-i-request-a-deferment
What happens if I default on a loan?
Defaulting on a loan has very serious negative consequences.
The following are some of the consequences you may face.
Your loan may become due and you will have to pay off the entire amount.
Your loan may be turned over to a collection agency and you may be responsible for collection costs.
You will be ineligible for any more Financial Aid.
Your credit score will be negatively affected.
The IRS will be notified to intercept any refunds.
Your wages may be garnished.
You may be susceptible to litigation.
You will lose the right to defer your loan payments.
Your college may withhold academic transcripts.
What are my Grad PLUS loan cancellation options?
Your Grad PLUS loan may be discharged in the case of death or permanent disability. Documentation of your death or disability must be submitted to your servicer. Your loan may also be eligible for cancellation if:
• Your school closed before you completed your program.
• Your school forged your signature on your promissory note or falsely certified that you were eligible for a Grad PLUS loan.
• Your loan was falsely certified because of identity theft.
• You withdrew from school and your school owes you or the US Department of Education a refund.
What happens to my loan if I move or change schools?
As a Federal Loan borrower, it is your responsibility to notify your school and/or servicer of certain changes.
You must notify your financial aid office if you:
• Reduce your enrollment status to less than half time
• Withdraw from school
• Stop attending classes
• Fail to re-enroll for any term
• Change your expected graduation date
• Change your name, local address, permanent address, or email address
You must notify your school and/or servicer if you:
• Change your address or telephone number
• Change your name (for example, maiden name to married name)
• Withdraw from school or begin attending less than half time
• Transfer from one school to another
• Change employer or employer’s address or telephone number change
• Have any other change in status that would affect your loan (for example, the loss of eligibility for an unemployment deferment by obtaining a job)
Remember: It is your responsibility to repay your loan(s) on-time and to communicate any change in status to your financial aid office and servicer.
Do you have any suggestions for what I should be doing now to prepare myself for repaying my loans?
• Make interest payments
Try to make interest payments on your Grad PLUS Loan while you are in-school. Remember any unpaid interest will be capitalized and increase the total cost of your loan.
• Prepare a realistic budget and stick to it
• Keep track of your loan benefits
It’s very important to pay these loans on time to avoid the loss of any benefits.
• It is your responsibility to make your payments on time.
• Open all of your mail