Federal Grad PLUS Loan

The Federal Direct Graduate PLUS Loan Program provides graduate students with additional loan funds if the Unsubsidized Stafford Loans are insufficient for their educational needs.

Federal Grad PLUS Loan:

Federal Direct Graduate PLUS Loans are general loans that graduate students can borrow to help pay education expenses. The U.S. Department of Education (ED) is the lender and offers fixed, low-interest loans to eligible students. Dominican University of California and the Office of Financial Aid urge parents to carefully consider the need for the loan and the amount and to borrow responsibly. Loans from the government must be repaid and Grad PLUS Loans can quickly add up. We recommend that students borrow the minimum amount necessary.

Grad PLUS Loans require a secondary application which can be completed at studentloans.gov. The loan is solely in the student's name. Students may borrow up to their total estimated cost of attendance (minus any other financial aid received). However, students are strongly encouraged to maximize Stafford Loan usage before taking a PLUS Loan due to more a lower interest rate. Student borrowers must reapply each year if they plan on making use of PLUS Loans each academic year.

Payment on the loan is automatically deferred while the student is enrolled at least half-time and for an additional six month grace period after the student graduates, leaves school, or drops below half-time enrollment. During this time, interest will accrue, but the student is not required to make repayment on the principle.  

2016 - 2017 Step-by-Step Instructions for Applying for the Grad PLUS Loan

APR

Interest rates for Grad PLUS Loans are fixed for the life of the loan, which means the interest rate is locked and will not change for the life of the loan. The Federal Government will set and publish the APR each year for the loans disbursed for that academic year. See the chart below for the current and previous year’s rates.

Loans Disbursed Between...

APR 


7/1/16 - 6/30/17

6.31%


7/1/15 - 6/30/16

6.84%

Interest accrues on the Grad PLUS Loan immediately following disbursement. Even though payment is not required during deferment and the six month grace period, the Office of Financial Aid strongly recommends that borrowers make payment on the interest as it accrues. Any unpaid interest remaining on the loan will capitalize and get added as part of the principle balance once the grace period ends. This will cost the borrower more in the long-term as the interest the new balance creates will be greater than what would have accrued on the original principle.

Amount

Borrowers have the option of either applying for a specific amount t or the maximum amount available. The maximum amount available will be determined by the Office of Financial Aid after reviewing the aid the student currently is awarded. For example, if a student's Cost of Attendance is $60,000 and the student was awarded $20,000 in aid before the PLUS Loan, the maximum amount of the PLUS Loan would be $40,000 (60,000 - 20,000 = 40,000).

If applicants are unsure about what amount to select, the Office of Financial Aid suggests selecting the maximum amount as the applicant can always lower the amount of the loan any time before the loan disburses and for up to 30 days after it disburses. For example, if the maximum amount of the loan is $20,000 and the borrower only wants $10,000, the borrower can notify the Office of Financial Aid in writing and we will reduce the amount of the loan from $20,000 to $10,000.

If selecting a specific amount, parent borrowers need to be aware that the amount will be split evenly among the semesters in the specified loan period. For example, if a borrower only wants to borrow for the Fall semester and pay Spring out of pocket, then the loan period must be August - December. Otherwise, If the loan period designated for August - May, then the loan will be split in half to cover both Fall and Spring.

Borrowers also need to be aware that the amount of the loan selected will not be the amount the student receives as the government assesses loan origination fees. See the Loan Origination Fees section below for additional information.

Loan Origination Fees

The U.S. Department of Education asses a loan origination fee for all PLUS Loans, which reduces the total awarded amount listed on the student's award letter. See the table below for the fees assessed on a PLUS Loan throughout the 2016 - 2017 Academic Year.

Loan Originated Between...

Awarded Amount

Fee Amount

Net Amount Received

10/1/16 – 9/30/17

$10,000

4.276% ($427.60)

$9572

10/1/15 – 9/30/16

$10,000

4.272 ($427.20)

$9573

For students who will borrow a specified amount, be sure to request more than the exact amount amount that you want to receive in order to account for the fee and avoid a shortfall in aid. Borrowers can calculate the exact amount (if being assessed the 4.276% fee) by dividing the amount the borrower wants by .95724 (1 - .04276). For example, if a borrower wants the student to receive $15,000 exactly, then the amount on the application would need to be $15,670 ($15000 / .95724).

Repayment

While the U.S. Department of Education (ED) is the lender for the PLUS Loans, the ED will assign the loan to a financial institution to be the servicer of the loan. The loan servicer will handle the billing and other customer service related functions such as consolidation and changing repayment plans. The servicer will contact the borrower with introductory information and how to start making payments.

Borrowers will begin repaying PLUS Loans after the deferment and grace periods. However, the Office of Financial Aid recommends that, at minimum, payments on the interest are paid monthly immediately following disbursement as unpaid interest will capitalize (get added to the principle balance) once the grace period ends.

For information regarding repayment plans, please visit Federal Student Aid.
Students can estimate their loan payments with Federal Student Aid's Repayment Estimator.
Students can check to see who their loan servicer is by logging in to NSLDS.
For general information about managing debt, please visit our Debt and Default Management page.

Credit History

A credit-check will be performed during the loan application process to determine if the applicant is approved or denied for a PLUS Loan. However, the government does not look at credit score or debt-to-income ratios like a private lender would. The government is only looking at adverse credit history. If the applicant does not have any adverse credit history, then the applicant would be approved. If a applicant has adverse credit history, then the applicant may be denied. Adverse credit history consists of the following:

  • Bankruptcy discharge within the past five years.
  • Voluntary surrender of personal property to avoid repossession within the last five years.
  • Repossession of collateral within the last five years.
  • Foreclosure proceedings started.
  • Foreclosure within the last five years.
  • Conveying real property that is subject to a mortgage (by deed) to your lender to avoid foreclosure (deed in lieu of foreclosure).
  • Accounts currently 90 days or more delinquent.
  • Unpaid collection accounts.
  • Charge-offs/write-offs of federal student loans.
  • Wage garnishment within the last five years.
  • Defaulting on a loan, even if the claim has been paid.
  • Lease or contract terminated by default.
  • County/state/federal tax lien within the past five years.

If the applicant is approved, a Master Promissory Note will need to be completed prior to the very first disbursement of a Grad PLUS Loan. If the applicant is denied for the loan, there are other options as the loan can be pursued further with an endorser or an appeal. The applicant will be presented with these three options as well an option that they are unsure of which decision to make. If that option is selected, the Office of Financial Aid will be in contact with additional information about the other options.

Master Promissory Note and Grad PLUS Entrance Counseling

The U.S. Department of Education requires student borrowers to complete Grad PLUS Entrance Counseling and sign a Grad PLUS Master Promissory Note (MPN) prior to receiving the Grad PLUS Loan. Entrance Counseling advises students what it means to take a federal student loan, how the loan process works, how to manage education expenses, what other financial resources to consider, and their rights and responsibilities as a student borrower. The MPN is a legal agreement between the borrower and the Federal Government in which the borrower promises to repay the loans and any accrued interest and fees. It also explains the terms and conditions of the loans, such as how interest is calculated and what deferment and cancellation provisions are available.

Both the Entrance Counseling and MPN must be complete at studentloans.gov. Borrowers must be careful to select the PLUS MPN for graduate students as there is a separate PLUS MPN for parent borrowers. The Office of Financial Aid automatically receives notification when a MPN is completed. PLUS Loans will not disburse or appear on the billing statement if the MPN has not been signed. MPNs expire after 10 years; thus, students would only complete the MPN prior to the very first disbursement of the Grad PLUS Loan and would not complete a new MPN for Grad PLUS Loans in future years until the MPN expires.

Endorser

If a student is denied for the PLUS Loan, the student has the option to pursue the loan again with an endorser who does not have adverse credit history. An endorser is a cosigner for the loan who would be equally responsible for the payment of the loan. Endorsers must create their own FSA IDs in order to access studentloans.gov and complete the application process to endorse the loan. If approved, the endorser must specify an amount for the loan as they are unable to opt for the maximum amount available.

Additionally, if approved with an endorser, the borrower must complete PLUS Counseling.

Appealing the Denial Decision

Another option for students who are denied for the PLUS Loan is to appeal the decision with documentation that the adverse credit decision is incorrect or there are extenuating circumstances related to the adverse credit history. (This appeal would be submitted to the U.S. Department of Education (ED) rather than the Office of Financial Aid.) If the documentation is to the satisfaction of ED, the loan may be approved.

If approved with the appeal, the borrower must complete PLUS Counseling.

PLUS Counseling

If a student is approved for the loan with either an endorser or by appealing to ED, the student must complete PLUS Counseling. PLUS Counseling is the government's online training regarding the impact of loans and the student's rights and responsibilities regarding repayment. PLUS Counseling is completed online at FSA IDs in order to access studentloans.gov. PLUS Counseling must be completed in order for the loan to disburse or appear on the billing statement. Note: Endorsers are not required to complete PLUS Counseling.