MEDebt Solutions

NEW GRAD PLUS Program

Summary of Key Fact, Terms and Conditions for the Graduate PLUS Loan:

Graduate/professional students are eligible for PLUS loans.

Loans made to Grad PLUS borrowers are the same as those that apply to PLUS Loans made to parents of dependent undergraduates.
The main difference between the Grad PLUS Loan and the Parent PLUS Loan is that graduate and professional students who are denied a PLUS loan because of an adverse credit history will not be eligible for increased Stafford Loan limits.
All Grad PLUS applicants must complete and submit the Free Application for Federal Student Aid (FAFSA) before applying for a PLUS Loan.
Before applying for a PLUS Loan, a graduate or professional student must also apply for and the school must determine the student's eligibility for the maximum annual subsidized and/or unsubsidized Stafford Loan amounts.
A graduate or professional student is not required to receive subsidized and/or unsubsidized loan funds as a condition for receiving a PLUS Loan, and a school may not require a graduate or professional student to receive subsidized and/or unsubsidized loan funds before the student may apply for a PLUS Loan.
If a graduate or professional student declines Subsidized and/or Unsubsidized loans for which they are eligible, the Subsidized and/or Unsubsidized loan amounts that the student could have received are not counted as EFA (Estimated Financial Assistance) when determining the PLUS Loan amount the student may borrow for that period of enrollment.
PLUS loans interest rates are fixed at 8.5% and 7.9% from the Direct Loan Program.
The loan fee on all PLUS Loans is 4% of the principal amount of each loan the borrower receives (3% origination and 1% guarantee).
The Grad PLUS loan does not reduce eligibility for the Stafford Loan, but the PLUS loan limit will take the amount borrowed under the Stafford Loan into account.
There are no cumulative loan limits.
The PLUS loan is limited to cost of attendance minus aid received, as certified by the school.
PLUS loan eligibility requires that the borrower not have an adverse credit history (defined in regulations as being 90 days or more delinquent on any debt, or having a credit report that shows default, discharge, foreclosure, repossession, tax lien, wage garnishment or write-off of a Title IV debt during the five years preceding the date of the credit report).
A Grad PLUS applicant who is determined to have an adverse credit history may receive a PLUS Loan if he or she obtains an endorser who does not have an adverse credit history.
Grad PLUS loans do not use any kind of a debt-to-income ratio or FICO score, unlike private education loans.
The repayment period for a Grad PLUS loan borrower begins on the date of the final disbursement of the loan, and the first payment is due within 60 days after the date the loan is fully disbursed.
Grad PLUS borrowers may receive a deferment while enrolled on at least a half-time basis. Upon dropping to less than half-time enrollment status, the borrower is not entitled to a grace period on his or her PLUS Loans.
Grad PLUS borrowers must apply for an in-school deferment—deferment eligibility is not automatically determined. The Grad PLUS borrower may apply for an in-school deferment by submitting an In-School Deferment Request to their servicer.
In-school deferments do not apply to periods when the borrower is serving in a medical internship or residency.
Medical students remain eligible for the economic hardship deferment during internships and residencies, and have the option of consolidating the Grad PLUS Loans to obtain new eligibility for deferments, since a new loan resets the clock on deferments.
Interest continues to accrue during periods of deferment and forbearance.
There is no grace period with PLUS loans.
The Grad PLUS loan presents a never before available cost effective alternative to private education loans. Eligibility for private education loans typically depends on a borrower’s debt-to-income ratio and FICO score. Eligibility for the PLUS Loan does not depend on these factors. You can get a PLUS loan even if you have a bad credit score, so long as you don't have an adverse credit.
The PLUS loan has a fixed interest rate of 8.5% (7.9% from the Direct Program) that does not depend on your credit score. The loan fees on a PLUS loan total 4%, while the loan fees on private education loans depend on your credit score and can be as high as 11%.
All PLUS borrowers in addition to having the option of consolidating has repayment incentive program opportunities as well. For example, USEFG offers 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. The Direct PLUS Loan Program offers an up-front interest rebate for equal to 1.5% of the principal amount of each loan the borrower receives. As with all discount incentive offers be sure you understand and confirm the details of the fine print.
For a recommended selection of Grad PLUS programs with excellent benefits, email info@MEDebtSolutions.com.

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

July 2006