Federal Direct Plus Loan for Graduate Students
The Federal Direct PLUS Loan is a federal loan program. A student can borrow up to the school-determined cost of attendance minus other financial aid each year through the PLUS Loan program.
Payments on the principal of the PLUS Loan can be deferred while the student is enrolled at least half time. Unlike the Direct Loan program, the PLUS Loan does not have a grace period after the student stops attending school. It is likely, however, that the student will qualify for a deferment or forbearance to temporarily relieve them of payment responsibility during bar study and prior to the beginning of employment. Students should contact their servicer for additional information.
The Direct PLUS Loan has a variable fixed interest rate based on the U.S. 10-Year Treasury Note Index. The Federal PLUS Loan for Graduate Students carries a rate of the 10-year index plus 4.60%. For loans that first disburse from July 1, 2019 through June 30, 2020, the interest rate is 7.079%.
While rates will vary from year to year, the rate assigned to the loan at the time of disbursement will be the fixed rate on that loan for the life of that loan. The Grad PLUS Loan will never have a rate higher than 10.50%.
The Graduate PLUS Loan requires an origination fee – a fee charged by a lender on entering into a loan agreement to cover the cost of processing the loan. The fee will be deducted from the gross amount of the loan borrowed. Borrowers applying for a Graduate PLUS Loan before mid-September 2019 should expect to receive 4.248% less money than they request on the application or approve in LionPATH. Origination fees change annually as of October 1.
The Graduate PLUS Loan requires a credit history review to verify a potential borrower does not have an adverse credit history. The Grad PLUS Loan interest rate and origination fee are not determined by an individual’s credit score or history – they are fixed for all borrowers. A borrower with adverse credit will not be able to receive a PLUS Loan without a credit-worthy endorser. Adverse credit is defined as having one or more of the following:
- Currently 90 days or more delinquent on repayment of any debt
- Have had debt discharged in bankruptcy during the past 5 years
- Evidence of a default, foreclosure, tax lien, repossession, wage garnishment, or write-off of a Title IV (federal student aid) debt during the past 5 years
- Unpaid collection accounts
The Graduate PLUS loan carries an origination fee of 4.264%. This fee will be deducted from the gross amount of the loan borrowed, so borrowers should expect to receive 4.264% less money than their application amount.
HOW TO APPLY FOR A FEDERAL DIRECT GRAD PLUS LOAN
- Visit the Federal Student Aid website and select the Graduate/Professional Students tab.
- Select Apply for a PLUS Loan.
- Log in using your FSA ID.
- Select Pennsylvania State University in the drop down.
- Choose August for the requested loan start date and May for the requested loan end date.
- Enter all requested information.
- Follow on-screen instructions the rest of the way through the e-sign/MPN process
- Once this loan has posted to LionPath, the student must accept the loan to finalize the process.