- name: Grad Plus Loan (Graduate Plus)
- interest rate: 7.9%
- interest type: unsubsidized
- maximum repayment term: 25 years
- grace period: none
- maximum loan amount: tuition and living expense
Worst Among the Government Loans
The Grad Plus is the worst among the government loans. If you max out the Stafford Loan (or cannot get the Stafford because you go to a certain Caribbean medical school) then get real comfortable with this loan.
Grad Plus Is Not Needs-Based
Even though Grad Plus is preferable over private loans, it is still very much like them. In order to qualify for either the Grad Plus or private loans, you must have a good credit history. This is the only medical school loan from the government that qualifies you by your credit history. So this is not a needs-based loan.
Watch Out Before It Gets Too Big
Be very careful. If the unsubsidized Stafford loan will quickly grow, this will grow even more so. Pay this off as soon as possible. For more options on how to pay off this monster of a loan, check out the medical school loan forgiveness / repayment programs and scholarships section.
If this loan compounds for too long, you may have to look into the Income-Based Repayment program. Being eligible for the Income-Based Repayment program and other available governmental programs is the main difference which separates this from a private loan. To find out more about the Income-Based Repayment program, refer to the default on medical school loans section.
Avoid Grad Plus if You Can
Hopefully, you do not have to meet this beast of a loan. An interest rate of almost 8% is really, really steep. Not only is the interest rate high, the origination fee (money you pay to obtain the loan) is high as well, at 4%. In a sense, you are only getting 96% of the money you are borrowing, but you are responsible for 100% of it.
This article is part of the Medical School Loans series. Click on the link if you want more tips and hints about borrowing money smartly.