Student Loans: What is a Direct PLUS Loan?

August 2nd, 2021 by

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There are actually two different types of Direct Plus loans for students, according to the Consumer Financial Protection Bureau

A Direct PLUS Loan is a federal loan that graduate or professional degree students and parents of dependent undergraduate students can use to help pay for education expenses. 

Related: Student Loans: How Much Should You Borrow?

In addition, Direct PLUS loans have a fixed interest rate and are not subsidized. 

This means that you begin accruing interest while you are enrolled in school. You will also be charged an origination fee to process your Direct PLUS Loan. 

The fee is deducted from the loan disbursement before the funds are released to you or the school. 

Grad PLUS loans

Grad PLUS loans cover any costs not already covered by other financial aid or grants, up to the full amount of attendance. This type of loan allows you to borrow money to pay for your own graduate-level education.

Parent PLUS loans

As the name suggests, this type of loan allows your parents to secure funds to cover any expenses not already covered by the student’s financial aid package or any grants they have received. 

Related: How to Choose Financial Aid

The Parents are responsible for the repayment of the loan and not the student. This type of loan also comes with a no “grace period,” which means that parents will have to start repaying this loan as soon as you or your school receives the funds. 

Parents, however, may be able to request a delay in making payments while you are in school or for an additional six months after you graduate, leave school, or drop below half-time enrollment status.  

Your parents will still be responsible for the interest that accrues while the payments are deferred.


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