A Direct PLUS loan is a type of federal loan that graduate or professional degree students or parents of dependent undergraduate students can use to help pay for education expenses. Direct PLUS loans have a fixed interest rate and are not subsidized, which means that interest accrues while the student is enrolled in school. To qualify for a Direct PLUS Loan, you must pass a credit check. There are two types of Direct PLUS loans: the Grad PLUS loan and the Parent PLUS loan.
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Grad PLUS loans: These loans are available to graduate or professional students who need to borrow additional funds beyond their subsidized and unsubsidized loans.
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Parent PLUS loans: These loans are available to parents of dependent undergraduate students to borrow money to cover any costs not already covered by the student’s financial aid package, up to the full cost of attendance. Parent PLUS loans are the financial responsibility of the borrowing parent, not the student, and cannot be transferred to the student upon the student’s completion of school.
It is important to note that Direct PLUS loans are unsubsidized loans, which means that interest begins accruing as soon as the loan is disbursed. Additionally, borrowers of Parent PLUS loans may qualify for an additional repayment plan to reduce monthly payments, the Income-Contingent Repayment plan (ICR Plan) .
