According to EducationData.org, the average cost of a master’s degree at a public state college is $29,150, and $62,100 at private school.
To help pay for this expense, graduate-level students sometimes turn to federal graduate loans for assistance. Grad students no longer qualify for federal Direct Subsidized Loans but they may be eligible to borrow Direct Unsubsidized Loans or Graduate PLUS Loans.
Unlike most other loans in the Direct Loan program, Direct PLUS loans require a credit check. If you’re exploring loans to help fund your graduate program, here’s what to know about Grad PLUS Loan credit score requirements and eligibility.
What Are Grad PLUS Loans?
As alluded to previously, subsidized loans are for undergraduate students. In addition to Direct Unsubsidized loans, graduate students may also be able to borrow PLUS Loans. There are two options for PLUS Loans, Grad PLUS Loans are available to graduate or professional student borrowers while Parent PLUS Loans are options for parents with undergraduate students. Grad PLUS Loans are non-need based financial aid option.
Grad PLUS loans have a fixed interest rate. You can borrow up to the cost of attendance that’s certified by the school, minus existing financial aid you’ve received. Payments can be deferred while you’re enrolled at least half-time in school, and an automatic six-month grace period occurs after leaving school before you’re required to enter repayment. Note that while the loan is in deferment, interest will continue to accrue.
Who Is Eligible for Grad PLUS Loans?
Students don’t have to demonstrate financial need to be eligible for a Grad PLUS Loan. However, in addition to meeting basic federal aid requirements, applicants must be enrolled in a certificate- or degree-issuing program at least half-time, and the program must be at an eligible school.
Upon meeting these academic requirements, graduate applicants must also agree to a credit check. If you don’t satisfy the Department of Education’s credit requirement, you’ll need to meet additional Grad PLUS Loan requirements to receive funding.
Grad PLUS Loan Minimum Credit Score
Unlike a traditional consumer loan through a private lender, the Department of Education doesn’t set a minimum Grad PLUS Loan credit score to qualify. Instead, the program states that borrowers can’t have an adverse credit history.
It determines adverse credit as:
• Having 90- or more day delinquent balance of $2,085 across one or more accounts.
• Having a collection or charge-off in the past two years.
• Having a foreclosure, repossession, bankruptcy discharge, tax lien, wage garnishment, or default within the past five years.
• Having federal student debt charged- or written-off within five years.
Although primary borrowers with adverse credit aren’t eligible on their own, they might still be approved if they meet extra Grad PLUS Loan requirements.
How to Check Your Credit Score
There are a couple of options for those interested in finding their credit score. Check in with your credit card company or bank, many financial institutions now offer credit scores to their customers.
Since there is no minimum credit score for a Grad PLUS loan, you may also want to review your credit history. You can review your credit report from all three credit bureaus: Equifax, Experian, and TransUnion.
Your credit reports include details for every credit account under your name, and their payment status.
You can request a copy of each credit report in one sitting through AnnualCreditReport.com, the central website of the national credit bureaus. You can also request your credit reports by mailing an Annual Credit Report request form or by calling its toll-free number: 1-877-322-8228.
You’re entitled to a free credit report from each bureau every 12 months. Additionally, you can request up to six free Equifax credit reports every year until 2026; this can be requested directly on Equifax’s website.
Tips for Maintaining a Good Credit Score
Although there isn’t a minimum credit score for Grad PLUS loans, maintaining a positive credit profile today can be advantageous if you need loans for future academic years, or decide on a student loan refinance later on.
Some ways to keep your credit in good standing are by:
• Making payments on time. Payment history accounts for 35% of your FICO® credit score. Make sure to pay at least the minimum payment by the due date every month.
• Keeping your credit utilization low. If you have revolving credit, like a credit card, avoid using a high percentage of your available credit limit. As much as 30% of your score is based on credit utilization ratio.
• Reviewing your credit report for mistakes. Although it’s rare, errors may come up on credit reports that can bring your score down. Regularly check your credit report and notify the bureaus of the error if you find one.
• Keeping your longest credit account in good standing. The age of your credit accounts affect your overall credit score by 15%.
• Having a mix of credit types. Keeping a mix of credit types could potentially help your credit score by 10%. For example, installment credit (student loan, auto loan, etc.) verus revolving credit (credit cards, Home Equity Lines of Credit, etc.).
What to Do if You Have Adverse Credit
For students with an adverse credit history, the Grad PLUS Loan program offers two options:
1. Secure an endorser. This person must not have adverse credit and will be liable to repay the debt if you, as the primary borrower, are unable to do so.
2. Provide proof of an extenuating circumstance. If your adverse credit history was due to an extenuating circumstance, you can appeal a denied application by providing supporting documentation. Approval isn’t guaranteed.
Regardless of which path you choose, if approved, you’ll also need to undergo PLUS Credit Counseling.
Alternatives to Grad PLUS Loans
Although you have access to apply for Grad PLUS Loans as a graduate or professional student, you’re not guaranteed for approval. For example, if you have adverse credit, but can’t secure an endorser, you might not receive Grad PLUS funding.
Below are some other graduate school loan options and financial aid ideas if you need alternatives.
Grants, Scholarships, and Work-Study
Grants, scholarships, and work-study are financial aid opportunities that can help bridge the gap for your graduate education.
The first step to seeing whether you’re eligible for these programs is completing a Free Application for Federal Student Aid (FAFSA®). If you’re eligible for federal-, state-, or school-sponsored programs, you’ll be notified through your FAFSA award letter.
You can also apply for need- or merit-based grants and scholarships through private organizations, professional associations, or other nonprofit community groups.
If you’ve exhausted federal student aid options, a personal loan from a private lender could be an option to consider. Generally, you can use personal loans for nearly any large, upcoming expense, including costs associated with graduate school, like transportation or supplies.
Personal loans are available through private entities, like banks, credit unions, online lenders, and also through community groups and associations.
Recommended: Common Reasons to Apply for a Personal Loan
Private Student Loans
Another financial aid option that operates outside of the federal student loan system are private student loans. Private student loans are specifically for use toward educational expenses, like tuition and fees, and textbooks.
These loans are provided by private banks, credit unions, and financial institutions. Some states and schools also offer private student loan options.
A private student loan is an installment loan, and can have fixed- or variable interest rates. Each lender has its own eligibility requirements and loan terms. Since these loans aren’t federally owned they don’t offer the same benefits that federal loans provide, like access to loan forgiveness and extended deferment. For this reason, federal student loans are generally prioritized over private student loan options when evaluating financing options.
Explore Private Student Loan Rates
If after accessing your financial aid situation, you find you need more education funds, SoFi can help. SoFi’s private student loan lets you borrow up to your school’s certified cost of attendance at competitive rates. Plus, checking your rate online takes only three minutes.
Can you be denied a Grad PLUS loan?
Yes, you can be denied a Grad PLUS Loan if you don’t meet the Department of Education’s eligibility requirements. You must be a graduate or professional student who’s enrolled in a degree- or certificate-granting program at an eligible school. You also must not have adverse credit, and must meet the general requirements for federal student aid.
Do Grad PLUS loans check your credit score?
Yes, Direct PLUS Loans, which include Grad PLUS Loans, require a credit check. The credit checks reviews a borrower’s credit history for adverse marks. Despite having adverse credit, however, borrowers might still be able to receive Grad PLUS funding by adding an endorser or by providing proof of extenuating circumstances.
Are cosigners required for Grad PLUS loans?
Cosigners are not required to qualify for a Grad PLUS Loan. However, if the primary borrower has adverse credit, having a cosigner (also known as an endorser), might help the primary borrower qualify.
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