What Credit Score Do You Need for a Grad Plus Loan?
Grad PLUS Loans can be an option to bridge funding gaps for college. This article breaks down the specs and if a Grad PLUS Loan is the right option for you.
When it comes to attending graduate school or getting a professional degree, the cost of attendance can cost more than the Direct unsubsidized loan, which is the “regular” student loan offered by the government. In this situation, it might make sense to turn to the Grad PLUS Loan for help bridging your funding gap.
While there is a credit check associated with the Graduate PLUS Loan, there isn’t a credit score requirement. Let’s take a look at Grad PLUS Loans and what borrowers need to know about getting them.
What is a Grad PLUS Loan?
Grad PLUS Loans can cover up to the cost of attendance at your school, minus other financial aid (including Direct Unsubsidized Loans for graduate or professional students). They are a subset of Direct PLUS Loans, which are offered by the U.S. Department of Education as a way for parents or graduate students to borrow money when they reach the limit for Direct Subsidized and Unsubsidized Loans.
Parent PLUS Loans are aimed at parents who want to help their children pay for school, while Grad PLUS Loans are meant for graduate and professional students. They have a fixed interest rate based on the time that the loan is disbursed. In some cases, depending on your credit situation, it can actually make sense to use an organization, like Juno, to help you find private loans for graduate school. For those with good credit, Juno might be able to save you money on student loan debt.
Grad PLUS Loan credit score requirements
It’s important to note that, while there isn’t a credit score for Grad PLUS Loan eligibility, there is still a credit check.
Rather than requiring a specific credit score for a Grad PLUS Loan, the Department of Education instead checks to make sure you don’t have an “adverse credit history.” The items that are considered “adverse” including the following, which can be found on your credit report:
- Bankruptcy during the previous five years
- Foreclosure during the previous five years
- Repossession during the previous five years
- Default during the previous five years
- Federal student loan charge-off or write-off during the previous five years
- Tax lien during the previous five years
- Wage garnishment during the previous five years
- Accounts with a total outstanding balance of more than $2,085 that are 90 or more days delinquent, or have been placed in collection or have been charged up in the previous two years
How to get a Grad PLUS Loan with an adverse credit history
Even though you don’t need to meet a specific Grad PLUS Loan credit score requirement, having an adverse credit history can make it difficult to get a loan for school. Additionally, if you have one of these adverse history issues, you might also have a hard time getting a private student loan.
There are ways to get a Grad PLUS Loan, even if you have an adverse credit history, though. The Department of Education offers two possibilities:
- Get an endorser. An endorser is someone who doesn’t have an adverse credit history and is willing to pay your loan off if you don’t. An endorser is similar to a cosigner on a private loan.
- Explain your adverse credit history. If there are extenuating circumstances that led to your adverse credit history, you can provide documentation and explanation. Some extenuating circumstances include agreement to pay a collection account, divorce, debt consolidation, and short sale. Most of the documentation requires notarization or official stationery.
On top of choosing one of these options to get approval for a Grad PLUS Loan while having an adverse credit history, you’re also required to complete credit counseling through an approved program.
How to apply for a Grad PLUS Loan
In order to apply for a Grad PLUS Loan, you must first fill out a Free Application for Federal Student Aid (FAFSA). Once that’s done, and you have a financial aid package from your chosen schools, you can go through the process of applying for a Grad PLUS Loan if you still have a funding gap.
In general, you should check with your school’s financial aid office to find out how they handle Grad PLUS Loan applications. In many cases, the application can be completed online through the Department of Education website. Don’t forget that you will pay an origination fee with your Grad PLUS Loan. This fee is deducted from each disbursement of the loan.
Also, keep in mind that you will need to begin repayment six months after you leave school or are no longer enrolled at least half-time.
Grad PLUS Loan vs. private student loans
Before deciding to get a Grad PLUS Loan, don’t forget to review your private student loan options, especially with Juno’s negotiated rates. While it makes sense to look for fellowships, scholarships, and grants before getting student loans, even after getting this type of federal aid and federal student loans, there might still be a funding gap.
Because there is no Grad PLUS Loan credit score requirement, it can be tempting just to get this loan, especially if you already have other federal student loans. However, the interest rate might be higher, and you will pay origination fees.
On the other hand, there are some private student loans for graduate school that come with lower interest rates if you have a good credit score. Using an organization like Juno, which can help you find good deals on private student loans, can help you save money over time. On top of that, you can usually avoid a loan origination fee.
If you have good credit, it might make sense to compare rates and see if a private graduate student loan can bridge your graduate or professional degree funding gap.
There might not be a required credit score for Grad PLUS loan qualification, but that doesn’t mean it’s the best deal for you. If you have an adverse credit history, you might not be able to get a loan anyway. However, even if you don’t have problems that prevent you from getting a Grad PLUS Loan, it might not work for you. Compare rates and use an organization like Juno to see if you can get a better interest rate with a private grad school loan.
Juno can help borrowers to find a student loan or refinance a loan at the most competitive possible rate. We get groups of buyers together and negotiate on their behalf with lenders to save them money on private student loans and private student loan refinance loans.
Miranda has 10+ years of experience covering financial markets for various online and offline publications, including contributions to Marketwatch, NPR, Forbes, FOX Business, Yahoo Finance, and The Hill. She is the co-host of the Money Tree Investing podcast and she has a Master of Arts in Journalism from Syracuse University
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