NEW GRAD PLUS Program

INTEREST RATE AND FEES

15. What is the interest rate on a PLUS Loan?

The PLUS loan has a fixed interest rate of 8.5% and 7.9% from the Direct Program as the result of a legislative oversight (private FFELP lenders provides for significant discounts and rebates). As a fixed rate, this interest rate will not change throughout the life of your loan.

16. Is there a loan fee?

Yes. The U.S. Department of Education charges a loan fee of 4% (3% origination and 1% guarantee) of the principal amount of each PLUS Loan. This fee is deducted proportionately from each disbursement of your loan.

17. Are there discounts or rebates available on PLUS Loans?

Yes. FFELP lenders are offering an array of discounts and rebates. For example, USEFG provides an immediate reduced fixed interest rate of 7.9% plus a 3.0% rebate of principal 30 days after the last disbursements with a 0.25% interest rate discount for auto-debit and UPROMISE discounts. Direct PLUS Loan borrowers receive an up-front interest rebate repayment incentive (equal to 1.5% of the loan principal amount) that is currently available for Direct Stafford Loan borrowers

Sources include U.S. Department of Education, FinAid.com, and National Council of Higher Education Loan Programs (NCHELP).

July 2006