Should students find it necessary to borrow additional funds, there are other loan options aside from the Direct Unsubsidized Loan: The Federal Direct PLUS Loan for graduate students and also what is termed an “Alternative Loan.”
Direct PLUS for Graduate Students
PLUS loans are low-interest government loan funds available to graduate students to help meet educational costs.
Eligibility: Full-time or half-time graduate students; not contingent upon income level. Students must be U.S. citizens or eligible non-citizens. Consideration for Direct PLUS loan includes a required credit check. A credit freeze may prevent a borrower or an endorser from completing the credit check process and the credit freeze must be removed. For more information, please see this notice from the US Department of Education.
Annual amounts: Up to the total cost of educational expenses less other financial aid accepted by the student. No maximum loan amount per borrower.
Interest rates and fees: Fixed 7.595% interest rate for loans first disbursed on or after July 1, 2018 and before July 1, 2019. There is a non-refundable federal government origination fee which is deducted from the loan prior to each disbursement. The origination fee is 4.264% on loans first disbursed on or after 10/1/17 and before 10/1/18.
Payment terms: Payment begins after a six-month grace period after graduation or dropping below half-time enrollment. Repayment may last up to 10 years. You may prepay at any time without penalty. Loan consolidation and graduated repayment options are available.
Applying for a Federal Direct PLUS Loan
Deadline: In most cases, applicants should allow three weeks of processing time before the funds are needed. However, if the funds are needed for the beginning of the fall semester, Direct PLUS Loan applications should be made by mid-June.
How to apply:
Step 1: Apply online for a PLUS loan and sign the master promissory note (MPN) at www.studentloans.gov. This is the government site for managing your federal loans.
- Tip 1: On the website, there is important information about browser requirements under "What You Need". If you do not have a compatible browser, various features will not work.
- Tip 2: To find the PLUS application, you will need to log in using your FSA ID in order to access the area where you can apply for the PLUS and sign the master promissory note.
- Tip 3: When you input your SSN, do NOT use hyphens. In the date, slashes are acceptable.
Step 2: First-time borrowers need to complete the online Loan Entrance Counseling at www.studentloans.gov. The counseling explains the terms and conditions of borrowing Direct PLUS funds.
A second supplemental borrowing option is an Alternative Loan. An Alternative Loan is an education loan to the student from private lender funds which are not federally-guaranteed. Because of this, the interest rate is usually variable and can sometimes be higher than on Federal Stafford loans, and there are not the same provisions for loan cancellations and discharges. Alternative loans are also available for a parent or a sponsor to borrow on behalf of the student and a credit check would be used to determine eligibility.
Amount eligible to be borrowed: Up to the amount of the cost of attendance less any other financial aid accepted.
Interest rate: Some variable, some fixed.
Grace period: 6 months after student drops below at least half-time enrollment.
Federal consolidation with Stafford loans: No
If the student is interested in applying for an alternative loan, we suggest he/she research lenders by reviewing their websites and then contact the lender directly to apply.
Applying for an alternative loan:
Some of these are required by the Truth in Lending Act and the Higher Education Opportunity Act that require new disclosure for private student loans.
- Choose a lender and apply for the loan (usually online). The lender will provide a disclosure form to help you understand your loan options.
- Provide additional information as required by your lender.
- Receive and review your Approval Disclosure and carefully read the terms of the loan offer.
- Notify your lender of your acceptance of the loan terms by the date indicated on the Approval Disclosure.
- Receive, review, sign and return the completed borrower Self-Certification form to your lender prior to disbursement.
- Receive and review your Final Disclosure. If you wish to cancel the loan, you will need to notify your lender by the deadline indicated (Right to Cancel date) indicated on the disclosure.
- Receive disbursement of loan funds. The timing of the disbursement of funds will be determined by the school.