Grad PLUS Loan | How It Works, Rates & Eligibility 2025

Key Takeaways

• Grad PLUS Loan lets graduate/professional students borrow up to the full cost of attendance (minus other aid).
• Interest rates are fixed and set annually (2025–2026 rate: 8.94%). An origination fee (~4.228%) applies and is deducted from each disbursement. 
• Approval requires a FAFSA and a credit check (no adverse credit history or a successful endorser).
• Use Grad PLUS to cover tuition, fees, living expenses, and other school costs but compare with unsubsidized loans and private options first.
• Repayment options and borrower protections differ from other federal loans, read terms carefully and plan to manage origination fees and interest accrual. 

Introduction

The Grad PLUS Loan is a federal option designed for graduate and professional students who need additional funds beyond other federal loans. If you’ve completed your FAFSA and still face a gap between aid and cost of attendance, the Grad PLUS loan can bridge that gap. This guide explains who qualifies, how interest and fees work, application steps, pros and cons, and smart alternatives so you borrow wisely.

What Is a Grad PLUS Loan? 

A Grad PLUS Loan is a federal Direct PLUS loan for graduate or professional students. It:

• Covers up to the full cost of attendance minus other financial aid.
• Requires a FAFSA and a credit review for adverse credit history.
• Carries a fixed interest rate (set each July) and an origination fee deducted from disbursements.

Why it matters: Grad PLUS fills gaps that unsubsidized Direct Loans can’t, but it’s pricier than many other federal options, so treat it as a tool to use after exhausting lower-cost loan.

Who Qualifies for a Grad PLUS Loan? 

To be eligible you must:

• Be a graduate or professional student enrolled at least half-time at an eligible school.
• Complete the FAFSA for the award year.
• Pass a credit check you cannot have an adverse credit history unless you obtain an endorser or document extenuating circumstances. 

Bullet points lenders check

Current credit report for adverse history.

• Enrollment status (half-time or more).
• Cost of attendance compared to other aid received.
  These checks protect taxpayers and reduce lender risk while giving students a path to fund advanced degrees.

Interest Rate & Fees What to Expect 

Grad PLUS loans have fixed interest rates set annually by Congress. For the 2025–2026 award year, the Grad PLUS rate is 8.94% (fixed). Additionally, there’s a 4.228% origination fee deducted from each disbursement, which effectively reduces the net amount you receive. 

Important points:

• Interest accrues while you’re in school and during any deferment.
• Origination fees are charged on federal PLUS loans through at least 2026 factor this into your borrowing plan.

How to Apply

1. Submit the FAFSA. Schools determine your eligibility and show remaining needs.
2. Apply for a Grad PLUS Loan on studentaid.gov. You’ll complete the PLUS application and credit check in one session.
3. Accept the loan via your school’s portal. Your school handles disbursement and may require additional paperwork.

Practical checklist 

• Have your FAFSA and school award letter ready.
• Gather ID, SSN, and recent financial info.
• Ask your financial aid office about timing, disbursement dates, and whether the origination fee will affect net funds. 

Pros and Cons Is Grad PLUS Right for You?

Pros

Can cover the full cost of attendance when other aid falls short.

• Federal loan protections (deferment, forbearance, certain forgiveness programs).

Cons 

• Higher interest rates and origination fees than unsubsidized loans and many private options. 
• Credit check may disqualify some borrowers or require an endorser.
• Interest accrues immediately this increases total repayment cost.

Repayment Options and Loan Management 

Grad PLUS borrowers can choose repayment plans that may include:

• Standard, graduated, extended repayment.
• Income-driven repayment (IDR) options may apply to Grad PLUS if consolidated under Direct Consolidation Loan check eligibility.

Money-management tips

Consider making interest-only payments while in school to avoid capitalizing interest.

• Compare refinancing after graduation if private lenders can offer substantially lower rates but remember refinancing a federal loan may forfeit federal protections.
• Keep track of origination fees and net disbursement amounts to plan cash flow.

Real-World Example

Case: A medical student’s total cost of attendance is $80,000 for the year. After scholarships and Direct Unsubsidized Loans, $30,000 remains. The student applies for a Grad PLUS Loan of $30,000. With a 4.228% origination fee, the net disbursement is about $28,717; interest accrues while in school at the fixed rate set for the year. The student plans to make interest payments during residency to minimize capitalized interest.

This example shows why understanding fees and interest timing matters small differences compound across multi-year professional programs. 

Alternatives to Grad PLUS

If Grad PLUS terms don’t suit you, consider:

• Direct Unsubsidized Loans (lower cost for grads but capped).
• Scholarships, grants, or employer tuition assistance.
• Private student loans (shop rates carefully; better if you have strong credit/co-signer).
• Institutional payment plans offered by the school.

Partial-match external resource: For an official graduate loan overview, see the graduate loan guide on the federal student aid site. 

Conclusion

The Grad PLUS Loan is a powerful federal tool for graduate and professional students who need extra funds beyond other federal loans. It provides access to the full cost of attendance, but comes with higher fixed interest rates and an origination fee that reduce the net loan amount. To borrow smartly:

• File your FAFSA early and exhaust lower-cost federal options first.
• Understand the interest rate and origination fee for your award year (2025–2026: 8.94% and ~4.228% fee). 
• Compare Grad PLUS with alternative financing and plan repayment strategies that minimize interest capitalization.

FAQs

How much can I borrow with a Grad PLUS Loan?

You can borrow up to the school’s cost of attendance minus other financial aid. Confirm annual borrowing limits with your school’s financial aid office. 

What happens if I have adverse credit?

You can still qualify by obtaining an endorser (similar to a cosigner) or by documenting extenuating circumstances. If you can’t resolve the credit issue, you may be denied. 

Are Grad PLUS loans eligible for forgiveness?

Grad PLUS loans may be eligible for forgiveness under certain federal programs (like Public Service Loan Forgiveness) if you meet program rules. Review program specifics and consolidation options.

Should I accept Grad PLUS or a private loan?

Compare total cost (interest + origination fee), borrower protections, and repayment flexibility. If your credit is excellent, a private loan might offer lower rates but fewer protections. Evaluate both carefully.