What Is a Grad PLUS Loan?

Wanting to go to grad school? Wondering if you should take out a Grad PLUS Loan to help pay for it? Then you’ve come to the right place!

Here’s the scoop: While Grad PLUS Loans can help you cover the costs of a graduate or professional degree, they’re not a good idea. Yeah, turns out that whole “plus” part is pretty deceiving.

To help you see why, we’ll break down everything you need to know about Grad PLUS Loans. We’ll also answer some important questions along the way, like “What is a Grad PLUS Loan?” and “What does a Grad PLUS Loan cover?”

Let’s dive in!

What Is a Grad PLUS Loan?

A Grad PLUS Loan is a federal loan given to graduate or professional students to help cover any gaps in school costs after they max out scholarships and other financial aid. Grad PLUS Loans are a type of Direct PLUS Loan.

Here’s how they work:¹

• A Grad PLUS Loan lets you borrow up to the full cost of your college attendance.
• Approval for Grad PLUS Loans is based on your credit history.
• You must pay a loan fee (right now, the fee is 4.228% of the loan).
• Grad PLUS Loans have a fixed interest rate (the current interest rate for all Direct PLUS Loans is 9.08%).
• Interest starts collecting the moment you get your Grad PLUS Loan.
• You can consolidate Grad PLUS Loans.

What Does a Grad PLUS Loan Cover?

A Grad PLUS Loan will let you borrow up to the full cost of your college attendance, minus any other financial aid you’re able to get (like scholarships and grants) or other student loans you take out beforehand. People typically turn to them once they’ve hit the federal limit for Direct Unsubsidized Loans (which is $20,500 a year for grad students).²

The exact amount you’re able to borrow depends on the school, but the money can usually go toward things like tuition and fees, room and board, books and supplies, technology, and other equipment.

But remember: Even though they’re called PLUS loans, they’re not really a plus—because they just mean more debt for you (student loans plus more student loans).  

How Do I Apply for a Grad PLUS Loan?

To apply for a Grad PLUS Loan, you must:³

• Be enrolled at least half time in a graduate or professional degree program at a school that participates in the Direct Loan Program 
• Fill out the Free Application for Federal Student Aid (FAFSA) 
• Pass a credit check (This means you can’t have any student loan defaults, bankruptcies or other negative marks on your credit report. Otherwise, you’d need a cosigner.) 
• Meet the general standards for federal student aid (be a U.S. citizen, have a Social Security number, etc.) 
• Complete student loan entrance counseling if you’ve never received a PLUS loan before

Most schools want you to apply for Grad PLUS Loans directly through the Federal Student Aid website, but others have their own specific application process. You’ll also have to sign a “Master Promissory Note” to agree to the loan terms. (Yes, it’s as complicated as it sounds.)

Can Grad PLUS Loans Be Forgiven?

Grad PLUS Loans are technically eligible for income-driven repayment (IDR) plans and Public Service Loan Forgiveness (PSLF), but those programs are not a guarantee. For starters, IDR plans typically take about 20–25 years to complete. Even then, you have to meet a lot of conditions for your debt to actually be forgiven.

Ready to get rid of your student loans once and for all? Get our guide.

And to qualify for PSLF, you have to work for an approved employer—which in most cases won’t pay a ton of money. So, unless you’re planning to use your graduate degree for a nonprofit or the government, you’re probably not going to have your loans forgiven that way.

Should I Apply for a Grad PLUS Loan?

Short answer: No. If you haven’t realized it by now, Grad PLUS Loans are just another way to go even deeper into student loan debt.

If you’re like most people, you’re probably banking on getting a good-paying job after grad school so you can pay off all your student loans. That doesn’t always work out, though.

It may take a while to find the right job and work your way up to a higher salary—or you may get a year into grad school and realize it’s not for you. But you’ll still have student loans to pay off regardless. Ouch.

Plus, by the time you finish school, you’ll already have racked up a ton of interest. And when you’ve got a huge student loan with a huge interest rate, the debt can wind up growing faster than you can make progress. Just ask the doctors, dentists and lawyers out there who are still paying off their student loans from decades earlier.

The truth is, student loans steal your paycheck and your peace, hanging over your head for years and forcing you to pay a ton of extra money in interest. And don’t forget that pesky 4.228% origination fee, which could mean an extra $1,000 or more on top of all the interest.

No matter how you slice it, participating in this program is a bad idea.

Alternatives to a Grad PLUS Loan

Luckily, there’s some good news: You can fund your degree without taking out a Grad PLUS Loan! Here are some ways you can go to grad school debt-free and stay debt-free.

Choose the Right School

Probably the best way to avoid taking out student loans is to pick a school you can actually afford. Remember, you’re not choosing a school for their football team, their cafeteria or their beautiful campus—you’re choosing a school that will help you further your education and career. The degree itself is more important than where you got it from. So, do your research and look for grad programs that fit in your price range.

Consider Graduate Certificates

Are you sure grad school is the right choice? Depending on your goal, you might look into graduate certificates. A graduate certificate isn’t the same thing as an actual graduate degree. But if you want to learn more about a particular field or expand your skill level, graduate certificates are a more flexible and affordable option. They can also be a low-pressure way to get into a new field, and some grad schools even accept graduate certificates as credits.

Still Fill Out the FAFSA

The FAFSA isn’t just for people applying for student loans—it’s also a great way to get financial aid that you don’t have to pay back later. Get this done if you haven’t already.

Research Scholarships

High school seniors and college undergrads aren’t the only ones who can qualify for scholarships. Students earning their graduate or professional degrees also have plenty of scholarships available to them. You can use databases like Scholarship Owl to find the scholarships you’re most likely to qualify for. Just by taking the time to search and apply, you can cut the cost of tuition and other school expenses way down.

Look Into Graduate Assistantships

Graduate assistantships are paid positions for grad students that allow you to work part time at a school while also earning your degree. Assistants usually help professors with various tasks, conduct research, host events, and even teach some classes. It’s a great way to get even more involved in your field of study, make connections, and get extra hands-on experience. Each assistantship has different requirements, but most schools will offer a tuition waiver and some sort of stipend to help cover school expenses.

Ask Your Employer

If you’re employed full time and are interested in getting a degree in the same field as your current job, you should look into tuition reimbursement programs. Some companies will cover part (or all) of your tuition, especially if it will help you pour your skills back into the business. You’ll need to do some research on the front end to figure out exactly what degrees they’ll pay for and how much they’ll pay. But this can be a great way to grow your education and your career for a fraction of the cost.

Cash Flow Your Tuition

Even if you can’t get all your tuition covered, you can still get a grad degree by paying for it out of pocket. Believe it or not, cash flowing your degree is totally possible. You just need to take it one semester at a time and save up enough money to pay for your classes up front.

This helps you break up your education into affordable chunks and go at your own pace. Then, it’s just a matter of going to class, working your day job or side hustle, cutting expenses where you can, and focusing on staying out of debt.

It sounds like a lot, but if you take it one step at a time, you can make it happen.