Federal Direct PLUS Loan for Graduate Students

Graduate students have the option of taking out a Federal Direct PLUS Loan to assist with paying for their education.

After a student submits the FAFSA a Federal Direct PLUS Loan will appear on their award as an option if they meet initial eligibility requirements. If the student accepts the loan in CyberBear a credit check will automatically be done and the student notified of the results by the US Department of Education. The credit check is not performed until after the financial aid final review has been completed.

The first time a student takes out a Federal Direct PLUS Loan they will need to complete a Master Promissory Note (MPN) and entrance counseling. Each subsequent year a student's credit will be evaluated before the loan is approved.

Federal Direct PLUS Loan for Graduate Students Details

Graduate students are eligible to take out the Federal Direct PLUS Loan after they have applied for their annual limit in Federal Direct Unsubsidized Loans. They must be enrolled in at least six credits, not have an adverse credit history and be otherwise eligible to receive federal aid.

The Federal Direct PLUS Loan is not a need-based loan.

The interest rate on Federal Direct PLUS Loan varies each year. The interest rate for a loan taken in any given year is fixed for the life of that specific loan.

Interest accrues from the time of disbursement. Students can make interest only payments to keep interest accrual to a minimum.

If a student does not pay the interest before entering repayment, the interest will be capitalized, meaning the interest will be added to the principal. Then the student will be paying interest on their interest.

Academic Year Interest Rate
2020-21 5.30%
2019-20 7.08%
2018-19 7.595%
2017-18 7.00%
2016-17 6.31%

Direct PLUS Loans have an original fee which are taken out of each disbursement.

Currently, the fee is equal to 4.264% of the disbursement. So if a student borrowed $1000 they would receive $957, but they would owe back $1000.

The amount of Federal Direct PLUS Loan that can be borrowed in any given year is equal to the Cost of Attendance (COA) minus other aid received.

A student who borrows $30,000 at an average interest rate of 7% and uses the standard repayment schedule (120 equal payments) will have monthly payments of $348. When the loan is paid in full after 10 years they will have paid a total of $41,799.

To receive a customized loan repayment schedule, which shows multiple repayment options, a student can access the US Department of Education's Repayment Estimator.

The first time a student takes out a Federal Direct PLUS Loan they must sign a Master Promissory Note (MPN) through StudentLoans.gov.

A new MPN does not need to be completed in subsequent years. Students who have an endorser on their loan are required to sign a new MPN each year an endorser is used.  

First-time borrowers of a Federal Direct PLUS Loan must complete entrance counseling as a graduate before they can receive their first loan disbursement.

Entrance counseling teaches students about their rights and responsibilities as student borrowers. The counseling is completed online at StudentLoans.gov and should take approximately 20 to 30 minutes to complete. Students will need to log in using their FSA ID.

Returning or transfer students who have an outstanding Federal Direct PLUS loan do not need to complete this requirement.

Students will be notified by the US Department of Education if their Federal Direct PLUS Loan is denied due to an adverse credit history.

If it is denied, a student may attempt to override the credit decision by either obtaining an endorser (co-signor), or choosing to document extenuating circumstances relating to the reason they were declined. Once either action is taken the student must complete PLUS Credit Counseling on StudentLoans.gov.

Generally, a Federal Direct PLUS Loan will be for the full academic year, the money being disbursed in two payments, half each term. Loans taken out for the summer term are delivered in one payment.

When the funds are disbursed they are used to pay the balance owed to the school first. If there are excess funds they will be paid as a refund, to help cover educational expenses not charged by UM.

Repayment of a Federal Direct PLUS Loan begins six months after a student ceases to be enrolled in at least six credits. Though there are multiple repayment options, the standard plan requires that the student pay a minimum of $50 a month and have the loan paid off in ten years.

Students who are having difficulty making payments should contact their loan servicer as there are many options available to prevent them from going into default on their loans. Students can find the contact information for their loan servicer by logging into NSLDS.ed.gov using their FSA ID.

UM's Financial Education Program is available to assist students with loan repayment issues. If a student is having difficulty getting cooperation from their loan servicer they can contact the US Department of Education's Loan Ombudsman's Office.

Information about a student's loan is submitted to the National Student Loan Data System (NSLDS). Schools, lenders, servicers and guarantors authorized by the US Department of Education have access to the information in NSLDS.

Students and parent borrowers can also access the information recorded in NSLDS using their FSA ID.