Federal PLUS Loan Review
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Student loan ratings
Federal parent loan
Federal graduate loan
The bottom line:
Federal PLUS loans are available to parents of undergrads as well as graduate students. They are best for parents who may need the safety net they offer, and for grad students who have hit limits on lower-interest unsubsidized loans.
Federal parent loan review
5.0
/5 NerdWallet ratingPros
More flexible repayment options for struggling borrowers compared with private lenders.
All borrowers who attend a school authorized to receive federal aid can qualify.
Cons
May have higher interest rates compared with private lenders.
You pay an origination fee.
You can’t see if you’ll qualify without a hard credit check.
Best for parents who want the safety net federal loans offer.
Full Review
The direct PLUS loan is a federal student loan that can be taken out by parents to help pay for their child’s college education, or by graduate and professional degree students.
The interest rate for federal direct PLUS loans is 7.54% for 2022-23. There is also an origination fee of 4.228%, which is deducted from each loan disbursement.
PLUS loans are more like private loans than they are like other types of federal loans: They require a credit check and, for parents, come with fewer repayment options.
Students should take out PLUS loans to pay for grad school only after they’ve borrowed the maximum in unsubsidized federal direct loans.
Parents should take out PLUS loans if they want or need the programs these loans offer, such as income-driven repayment plans and Public Service Loan Forgiveness.
Interest rates on PLUS loans rose for the 2022-23 academic year after hitting record lows for the 2020-21. The rates on PLUS loans may be comparable to what you could receive through a private lender, but PLUS loans have large origination fees most private loans lack.
If you have good credit and don't need federal student loan benefits, shop around for a private loan before committing to a PLUS loan to compare overall costs.
Federal Direct Plus Loans at a Glance
Loans are only available for eligible graduate students and parent borrowers.
Borrowers with adverse credit history typically can't qualify on their own.
Parents and grad students can borrow up to the cost of attendance, minus other aid received.
How Federal Direct Plus Loans Could Improve
Federal PLUS loans may be the best option for you, but they're not perfect. They could improve by:
Eliminating student loan origination fees.
Making additional income-driven repayment plans available to parent borrowers.
Federal direct PLUS loan details
Is a federal direct PLUS loan right for you?
NerdWallet recommends federal student loans over private loans in almost all cases. But PLUS loans have some features that may make a private loan a more desirable option. As a general rule, take out student loans in this order:
Choose federal subsidized and unsubsidized loans first. As a parent, that means your child will borrow as much as they need in federal loans in their own name, up to the maximum. As a graduate student, that means taking out the maximum in unsubsidized federal loans.
Look into the interest rates you’d likely receive for private loans. Since these are based on credit history, borrowers with good or excellent credit will get the best rates. In addition to interest rates, look at lenders’ repayment alternatives and the flexibility they offer to borrowers who struggle to make payments. Private loans have limited repayment flexibility. But if you think you’ll be able to pay them off quickly or won’t need the option to postpone or lower payments, they may be cheaper.
Take out PLUS loans if your credit isn’t strong enough to get a low-interest private loan, or if you plan to qualify for Public Service Loan Forgiveness. Use PLUS loans to fill a gap after subsidized and unsubsidized loans, grants, work-study and scholarships have been applied. Borrow as little as you can manage.
» MORE: Compare graduate student loans
How to apply for a federal PLUS loan
PLUS borrowers must go through an additional step beyond submitting the Free Application for Federal Student Aid, known as the FAFSA. Here’s what to do:
Submit the FAFSA first. It’s easiest to file online using your Federal Student Aid ID. Learn how to complete it based on your individual situation with NerdWallet’s FAFSA guide.
Check with your school how to proceed next. Most will ask you to apply for PLUS loans on studentloans.gov, but some may have other requirements.
Apply for either a parent PLUS loan or a graduate PLUS loan online. The application must be completed in one session, so gather the documents in the “What do I need?” section first.
For parent PLUS loans, request a deferment on the application while the student is in school and for the six months after graduation, if desired. Otherwise, you’ll be required to make payments within 60 days after you receive the last loan disbursement.
Make sure you’ve lifted any credit freezes you’ve set up at the credit bureaus. You won’t be able to go through the required credit check otherwise. Here’s how to unfreeze your credit.
Sign a Master Promissory Note and attend entrance counseling if you’re a first-time graduate PLUS loan borrower.
Federal graduate loan review
5.0
/5 NerdWallet ratingPros
More flexible repayment options for struggling borrowers compared with private lenders.
All borrowers who attend a school authorized to receive federal aid can qualify.
Cons
May have higher interest rates compared with private lenders.
You pay an origination fee.
You can’t see if you’ll qualify without a hard credit check.
Best for graduate students who need to borrow beyond the federal unsubsidized loan limit.
STUDENT LOAN RATINGS METHODOLOGY
Our survey of more than 29 banks, credit unions and online lenders offering student loans and student loan refinancing includes the top 10 lenders by market share and top 10 lenders by online search volume, as well as lenders that serve specialty or nontraditional markets.
We consider 40 features and data points for each financial institution. Depending on the category, these include the availability of biweekly payments through autopay, minimum credit score and income requirement disclosures, availability to borrowers in all states, extended grace periods and in-house customer service.
The stars represent ratings from poor (one star) to excellent (five stars). Ratings are rounded to the nearest half-star.
Read more about our ratings methodologies for student loans and our editorial guidelines.