Fixed Interest Rate: Definition and What It Is
A Grad PLUS Loan is a federal Direct PLUS Loan available to graduate and professional students. The borrower is the student, not a parent. Eligibility requires passing a credit check. Borrowers with low credit may still qualify with a co-borrower. The loan covers the full cost of attendance minus other financial aid received, making it a common tool for students who have maxed out their standard federal unsubsidized loan limits.
Grad PLUS Loans carry a higher interest rate and a larger origination fee than Direct Subsidized or Unsubsidized Loans. They are eligible for income-driven repayment plans and Public Service Loan Forgiveness.
Why it Matters
Graduate and professional students often exhaust their standard federal loan limits early in their programs and turn to Grad PLUS Loans to cover the remainder. In high-cost programs, it is common for Grad PLUS borrowing to represent the majority of a student's total federal debt. The higher rate and fees relative to unsubsidized loans make Grad PLUS one of the more expensive federal borrowing options.
Borrowers who heavily used Grad PLUS Loans and are now in repayment should evaluate whether income-driven plans or Public Service Loan Forgiveness apply to their situation. The income-driven repayment guide on Yrefy's blog covers how different plans interact with higher loan balances typical of graduate borrowers.
Comparison
Grad PLUS and Parent PLUS Loans share the same interest rate and credit check requirement, but the borrower is different in a meaningful way. The grad student who takes out a Grad PLUS Loan is the legal borrower and has their own post-graduation income to drive repayment. They also have access to income-driven plans tied to their earnings. The parent who takes out a Parent PLUS Loan is the legal borrower for debt that benefited someone else, and they face repayment at a stage of life when protecting retirement savings is typically the higher priority.
