Your Guide to GradPlus Loans

When undergraduate courses are complete and graduation ceremonies have come to a close, students have a variety of options to consider. They might choose to enter the workforce and find a job in their chosen field, or they might choose to take a year off to explore the world, if they can afford it. Some might even choose to find a placeholder job, so they can catch their breath and pay back a little debt before getting a “real job.”

Some students, however, choose to go right back into the classroom, just as soon as they’ve finished their undergraduate studies. Moving on and becoming a graduate students is an impressive undertaking, and obtaining an advanced degree can be very helpful, if not necessary to succeed in certain fields. But paying for that graduate education can sometimes be difficult, which is where a GradPLUS loan can help.


Why Go to Graduate School?

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Sometimes, however, students go to graduate school for financial reasons. Evidence suggests that these students could reap big pocketbook-based rewards for their decision to stay in school for just a few more years.

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In addition to simply getting and keeping jobs, people who have an advanced education also tend to make a little more money each year, and numbers from the National Center for Education Statistics suggest that the advanced earnings can come remarkably early in a person’s career.
annual income bachelors vs masters degree
These people might make a little more money because they tend to be in positions of leadership. According to Forbes, Emerging Culture, Worldwide Success, reported by, Statistic Brain, nearly 75% of CEOs have Bachelor’s degree or higher.
CEO Education Stats 2014

In larger companies like those featured in the S&P 500, many high-ranking executives will have gone to business school and obtained an MBA. It’s certainly possible to obtain a leadership position and pull down a hefty salary without an advanced degree, of course. Many people manage to do so. But these statistics do seem to suggest that the most successful companies might look for an advanced education when they have a spot to fill. Going to graduate school could be quite helpful as a result.


Finding the Funding

While getting an advanced degree can help with future earning potential, the programs also tend to be remarkably expensive. At Duke University in the 2014-2015 school year, for example, fees for entering MBA students included:

In addition, students who attend graduate school may have a number of responsibilities to attend to, and all of these obligations might make working while going to school quite difficult.

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An article produced by The New York Times also suggests that the average graduate school student is 32 years old. Students like this might have other debts to pay, including:

  • Car payments
  • Mortgage payments
  • Former student loan payments
  • Credit card debt

GradPLUS Loans Can Help

As described by the U.S. Department of Education, GradPLUS loans are designed to help students afford graduate and professional programs, These loans come directly from the federal government, and aren’t loans students were eligible for when they were enrolled in undergraduate courses of study.

GradPLUS loans are generally used to pay for tuition, but the funds can also be used to pay for other educational costs, such as:

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Key Details

It almost goes without saying, but GradPLUS loans aren’t grants, so they must be repaid. The interest rate on GradPLUS loans is based on federal legislation, and is currently tied to the performance of the 10-year Treasury yield, so the cost can vary from year to year. In general, it’s best for students to limit the amount of money they borrow, so they won’t be stuck with a big bill at the end of their schooling. However, these loans also come with benefits, such as:

  • Flexible repayment plans
  • Deferred payments while students are enrolled in school full-time
  • Loan forgiveness, if students meet certain requirements after graduation
  • Forgiveness of debt if the student dies or is disabled

Private loans may not come with all of these bells and whistles, so these GradPLUS loans can be an attractive option for some students.


Getting Started

Applying for a GradPLUS loan is relatively easy. Students need to:

  1. Fill out the Free Application for Federal Student Aid (FAFSA)
  2. Wait for the award letter to come back
  3. Determine the cost of attendance for graduate school that year
  4. Maximize borrowing of lower-cost federal loan options, such as Stafford loans
  5. Subtract all other forms of aid from the cost of attendance
  6. If there is a gap between all other forms of aid and the student’s expected contribution, notify the school that a GradPLUS loan is needed
  7. Sign the Master Promissory Note for the loan amount

There can be a few complications, however, as these loans are dependent upon a student’s credit history. Those who have a poor credit rating might be denied a GradPLUS loan, and poor credit could stem from almost anything, including:

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Students with these strikes against them will find it difficult to obtain a loan, and as such, they should apply with an endorser to increase their chances of approval.


Other Options

While they are federal student loans, GradPLUS loans are not a guaranteed source of funding for graduate students. In fact, an article produced by Inside Higher Ed suggests that about 50 percent of PLUS loan borrowers are rejected.

Thankfully, these students have other options for funding their graduate education. For example, some students with poor credit and a willing cosigner may be eligible for private loans, even if they’re not eligible for a GradPLUS loan.

If you’re in need of a private loan, check out our student loan comparison tool. It allows you to research and compare a variety of different private loan options, so you can find the loan that best fits your financial profile.



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