Direct Graduate Unsubsidized Loans are designed to be the primary type of federal loans used by graduate students. They have generally better terms and fees compared with Direct Grad PLUS Loans, but their borrowing limits are significantly lower in most cases and may not cover your cost of attendance.
What Are Some Reasons to Avoid PLUS Loans? First, PLUS loans have no automatic grace period. Then there's the fact they aren't eligible for most IDR plans. Then, borrowing too much is easy to do, and finally, they're nearly impossible to get out of, even in bankruptcy.
For most student borrowers, federal Direct loans are the better option. They almost always cost less and are easier to repay. (This may not be the case if you are a parent or graduate student considering federal PLUS loans, though.)
The main difference between the Direct student loans offered to undergraduates and the Direct PLUS Loans offered to parents is that certain Direct Loans (Direct Subsidized Loans) for undergraduates are awarded based on financial need, whereas the PLUS loans are not awarded based on financial need, but do require a ...
The maximum Direct PLUS Loan amount that can be borrowed is the cost of attendance at your school minus any other financial assistance received.
Direct PLUS Loans are federal loans that graduate or professional students and parents of dependent undergraduate students can use to help pay for college or career school. PLUS loans can help pay for education expenses not covered by other financial aid.
Given the option, you should accept a Direct Subsidized Loan first. Then, if you still need additional financial aid to pay for college or career school, accept the Direct Unsubsidized Loan.
Federal student loans are made by the government, with terms and conditions that are set by law, and include many benefits (such as fixed interest rates and income-driven repayment plans) not typically offered with private loans.
Differences Between Direct Subsidized Loans and Direct Unsubsidized Loans. In short, Direct Subsidized Loans have slightly better terms to help out students with financial need.
A Direct PLUS Loan made to you as a parent cannot be transferred to your child. You are responsible for repaying the loan.
With federal PLUS loans, the government will check for an adverse credit history, although there is still no minimum credit score requirement. Those who have a less-than-perfect credit history, however, may need to meet additional requirements to get approved.
Grad PLUS Loans
Typically, graduate students can borrow $20,500 per year of Federal Direct Unsubsidized loans up to a cumulative aggregate limit of $138,500, including loans received for undergraduate study.
If your credit report indicates you are 90 days or more delinquent on any debt, are in default, have a bankruptcy, foreclosure, repossession, tax lien, wage garnishment or a write-off of any Title IV federal financial aid during the last five years, you will not be eligible to borrow a Grad PLUS Loan.
Interest accrual, interest capitalization, fees, deferment, forbearance, and grace periods can all increase your student loan balance. Paying more than the minimum each month, making extra payments, and paying interest while in school can help reduce your loan costs.
Drawbacks of Unsubsidized Student Loans
You're responsible for paying the interest on that loan from day one. Unsubsidized loans are not the worst loans you can borrow in terms of pure cost and the interest rate that you'll receive. However, the interest accumulates even before you enter repayment.
Direct Subsidized/Unsubsidized Loans have a lower fixed interest rate (6.8%) than Direct PLUS Loans (7.9%), and no interest is charged on Direct Subsidized Loans while you are in school at least half-time or during grace and deferment periods. Interest is charged on Direct PLUS Loans during all periods.
The most common types of federal student loans are Direct Loans, Parent PLUS Loans, Graduate PLUS Loans, Stafford Loans, Consolidation Loans, Perkins Loans, and Federal Family Education Loans (FFEL).
You must start paying back your loan after you graduate, leave school, or drop below half-time enrollment. Repayment starts after your six-month grace period has ended.
Direct PLUS loans can help pay for education expenses not covered by other financial aid. The U.S. Department of Education makes Direct PLUS Loans to eligible parents through schools participating in the Direct Loan Program. (We also offer PLUS loans for graduate or professional students.)
Direct Unsubsidized Loans
Yes, because they are still installment loans that must be paid back, even if they are from the government.
Grad PLUS loans may be included in a Federal Direct Consolidation Loan (which have a repayment period of up to 30 years) and are eligible for Income-Driven Repayment and Public Service Loan Forgiveness.
You must complete a Direct PLUS Application for each year you wish to receive a graduate (grad) PLUS loan.