Direct PLUS Loan
The Direct PLUS Loan, a student lending option through the federal government, is one of the less understood and often forgotten funding methods for education. Although it carries a higher interest rate than what is found in other federal products such as the Stafford and Perkins loan, the PLUS loan bridges a vital gap the others cannot.
About the Direct PLUS Loan
Direct PLUS is a lending program designed to cover up to a student's full cost of attendance, minus other financial aid. Unlike other federal options, Direct PLUS loans require a credit check for approval. A PLUS loan is similar in operation to a private student loan, but has lower fixed interest (in most, but not all cases) and more generous repayment terms.
PLUS loans come in two varieties, click the link below to learn more about each type of PLUS loan:
- Parent PLUS Direct Loan: Offered only to parents of undergraduate students.
- Direct Graduate PLUS Loan: Offered only to graduate students pursuing an advanced degree program.
Direct PLUS Loan Borrowing Limits
The maximum borrowing amount for a PLUS loan is based on the following formula:
Amount You Can Borrow = Total Cost of Attendance - Existing Financial Aid
Essentially, your school tells the Department of Education how much it costs to go there (with reasonable margins for books, housing, transportation, etc.) and whatever loans or grants you receive from filing your FAFSA are deducted from that total amount.
Direct PLUS Loan Interest Rate
Direct PLUS loans are currently set at 7.21% APR. Like an unsubsidized direct Stafford loan, interest begins to capitalize or build right after the funds are sent to your school. You have the option to begin paying it off immediately or you can postpone payments for up to 6 months after the student’s graduation.