Federal Parent PLUS Loan and Grad Plus Loan Review

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 8.94% for loans taken from July 1, 2025, to June 30, 2026. 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.

The rates on PLUS loans may be comparable to what you could receive through a private lender, but PLUS loans have origination fees that most private loans don't charge.

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.

» MORE: Compare parent loans: PLUS and private

Federal direct PLUS loan details

Interest rates, fees and terms

• Soft credit check to qualify and see what rate you’ll get: No, but all eligible borrowers receive the same rate. Rates are fixed over the life of the loan.

• Loan terms: 10 to 30 years once repayment begins, depending on the plan.

• Loan amounts: Up to the school's cost of attendance, minus other aid received.

• Application or origination fee: 4.228% origination fee.

• Prepayment penalty: None.

• Late fees: Yes.

Financial requirements

Borrowers must not have adverse credit history due to a previous student loan default, bankruptcy or other negative mark on their credit report. If you have adverse credit, you can still get a PLUS loan if you complete PLUS Credit Counseling and either appeal the decision or apply with a co-signer who doesn't have adverse credit.

Other requirements

• Citizenship: U.S. citizens and eligible noncitizens.

• DACA borrowers: Not eligible.

• Location: Available in all 50 U.S. states.

• Must be enrolled half-time or more: Must be enrolled half-time or full-time.

• Loan can be used for past due tuition: Yes.

• Types of schools served: Any school authorized to receive federal aid.

» MORE: Are you eligible for a parent PLUS loans?

In-school repayment options

Graduate PLUS loan payments are automatically deferred while borrowers are enrolled at least half-time in school and for the six-month grace period after leaving school. Parent PLUS borrowers can request a similar deferment; otherwise, repayment begins within 60 days of when the loan is fully disbursed.

There is no penalty for making payments on any PLUS loan while in school, so you may opt to make immediate or interest-only payments to reduce your debt if you opt for a deferment.

Post-school repayment options Borrowers are automatically enrolled in the standard 10-year repayment plan. To change your repayment plan, you must contact your loan servicer. You can use the federal student aid office’s Loan Simulator to find out which plans you might be eligible for and to get monthly and overall payment estimates. While graduate PLUS borrowers are eligible for various repayment plans, only the income-contingent repayment is available to parent PLUS borrowers.

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:

1. 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.

2. 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.

3. 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:

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.