PLUS Student Loan

By: EconomyWatch Content   Date: 27 November 2009

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With rising tuition costs, the PLUS student loan is a practical way to fund an education. While students can receive funds from Stafford loans and other financial aid to cover some costs, these loans are generally not sufficient to cover the overall costs related to education.

Types of PLUS Student Loans

There are two types of PLUS student loans:

  • Parent PLUS loan: Through this loan, parents can opt for federally guaranteed loans on behalf of their child to help pay for tuition fees and other expenses related to schooling at an eligible college or university.

  • Graduate PLUS loan: The loan, also called GradPLUS loan, is a student loan guaranteed by the US government. The interest rates applicable on these loans are low and fixed. 

Benefits of a Parent PLUS Student Loan

The primary benefit of PLUS student loans is that students can get federally guaranteed, low-interest loans to meet their education expenses, without worrying about collateral and need-based forms. The benefits of PLUS student loans include:

  • They have a fixed 8.5% interest rate as of July 1, 2006.

  • You receive 0.25% repayment interest rate credit when payments are set up for automatic debit from a bank account.

  • You can receive a maximum of the cost of education minus any aids received.

  • You can opt for deferment and forbearance options in case of financial difficulties.

  • You can repay over the period of ten years.

  • Unlike non-education loans, Parent PLUS loans do not require collateral. 

Benefits of Graduate PLUS Student Loans

The GradPLUS loan allows graduate students to borrow up to the total cost for their graduate school expenses, including tuition, boarding and lodging fees, supplies, lab expenses and travel.

  • Interest rate is fixed at 8.5%.

  • GradPLUS payments can be deferred until you finish graduation.

  • You do not need a cosigner to apply.

  • Interest is tax deductible for most graduation students.

Who is Eligible for a PLUS Student Loan?

PLUS loans are non-need based student loans. This means you do not have to demonstrate financial need to qualify. Eligibility is determined by a modest credit check that verifies the creditworthiness of the applicant.


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