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The Graduate and Professional PLUS Student Loans

If you are a graduate or professional student in need of financing for college, the Direct PLUS loan may be right and one of the best student loans for you. To qualify for this federal student education loan, you must have already earned a Bachelor degree and be working toward an advanced degree in your chosen field. Parent student loans are also available through the Direct PLUS program if you are under the age of 25 and are dependent on your parents for more than half of your support.

Terms of the Direct PLUS Loan for Students and Parents

Unlike other forms of federal student loans, the Department of Education checks the credit history of the primary applicant for federal student loans. A good credit history is required, whether the applicant is you or one of your parents. If neither you nor your parents can pass the credit check, your federal student loans request will be denied.

How to Apply for the Direct PLUS Loan

In order to be considered for this loan type, you must first complete and submit the Free Application for Federal Student Aid (FAFSA). Before the college you plan to attend can determine your eligibility for graduate student loans, it must first determine the maximum amount you can receive with either a direct subsidized or an unsubsidized Stafford student loan. Once that step has been completed, your next steps in obtaining a Direct PLUS are to fill out the application and the Master Promissory Note . This is a promise to pay back all of your graduate school expenses, plus all interest that accrues while you are in school.

Direct PLUS Loan Limits

Under this loan for professional students, you can borrow up to the cost of attendance at the college of your choice for one school year. Prior to issuing you the Direct PLUS loan, the Department of Education will deduct the amount that is equal to all other forms of financial assistance you are eligible to receive.

Fees and Interest Rates

Before each disbursement of your Direct PLUS loan, the Department of Education will deduct four percent of the total as a processing fee. In addition, you will be charged a 7.9 percent annual percentage rate and deducts a 4.0 percent fee each time a loan disbursement is made. This is a fixed interest rate that is not subject to market variations.

Repaying Your Loan for Graduate Students

The repayment period for a Direct PLUS loan begins as soon as you receive the loan, but it can be deferred while you are attending college at least half-time. Once you graduate or drop to attendance level lower than half-time, your first payment will be due within 60 days. You may be able to extend the deferment period to six months if you received your loan after July 1, 2008.

After you begin making payments on this loan for professional students, you typically have between 10 and 25 years to repay it in full. If you do not make any payments on your Direct PLUS loan during the deferment period, the interest will be capitalized and charged to you once repayment begins.

Types of Repayment Plans

The Department of Education allows several options for the repayment of federal student loans. The standard repayment plans provides a fixed monthly payment and up to 10 years to repay your loan. The extended plan is similar, with the exception that you have up to 25 years for repayment. A graduated repayment plan starts out low and then the monthly payment increases every two years. Finally, you may be eligible for the income based repayment plan if you meet income and family size guidelines or work in the public service sector.

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