GradPLUS and Private Loan Information
If you will need funds in addition to any scholarship and loan aid offered on your award notice, you may borrow from a couple of alternative loan programs. You may borrow up to the cost of attendance minus any other forms of financial aid you are receiving, which is the amount listed on your award notice as “Grad PLUS/Alternative Loan Eligibility”, if you have received an award already. If this is not clear when viewing your award information on Wolverine Access, make sure you have selected the Award Notices tab, and not Award Summary. Receipt of these alternative loans requires a good credit history. It is therefore extremely important to maintain good credit if you wish to take advantage of these loans.
There are two main types of loans in addition to Direct Unsubsidized loans – Federal Grad PLUS loans and private loans:
- Federal Grad PLUS Loans are offered by the Department of Education. The interest rate for new Grad PLUS loans is determined annually, based on the 10-year Treasury bill plus 4.6 percent. The interest rate for loans with disbursement dates between July 1, 2015 and June 30, 2016 is 6.84 percent fixed for the lifetime of the loan. There is a 4.272 percent loan origination fee that is deducted at disbursement. Interest rates for new loans will change to 6.31 percent on July 1, 2016. Advantages to the Federal Grad PLUS loan include:
- Ability to consolidate with other federal loans
- Fixed interest rate
- Income sensitive repayment plans, as well as potential loan forgiveness
- Private Loans are offered through various banks and lenders. They are typically variable interest rate loans, and to get the best rates, require that the borrower have excellent credit and/or have a cosigner. Origination fees for these loans are often determined by credit history. Please keep in mind that private loans are not eligible for the government’s Income Based Repayment (IBR) or Pay as You Earn (PAYE), Federal Public Service Loan Forgiveness, or Michigan’s Income-Based Debt Management Program (LRAP). Private loans offer very little flexibility during repayment.
For most students, Grad PLUS is the best option. Federal Grad PLUS loans are eligible for the loan repayment assistance programs that are offered by the University of Michigan Law School and the federal government. Grad PLUS also offer generous amounts of deferment for unemployment and economic hardship, if necessary.
If you choose to borrow a Grad PLUS or private loan, a separate application is required. Since credit approvals expire, the earliest a fall starter should apply is June 1, while summer starters can apply as soon as an award notice is received. If you borrow a Grad PLUS loan, please be sure to complete the School's Grad PLUS loan application, and not the one on the StudentLoans.gov website. You should allow at least 2-3 weeks for the loan to be processed and it will disburse right before the first day of classes.
Although you may borrow a Grad PLUS or private loan up to the amount of your budget, minus all financial aid for the academic year, we encourage you to limit your borrowing to the amount you think you will need. Our budget should be used as a guideline only and you should attempt to borrow as little as possible. If you have a shortfall later in the academic year, you may always apply again. Typically students will borrow for the full academic year (Fall-Winter or Summer-Fall-Winter) in their first application, since it’s no more expensive to do so, it saves you time, and you don’t have to remember to reapply in between terms. You can only borrow loans for the academic year when you are enrolled at least half-time, so we cannot process summer loans, unless you are enrolled as a summer starter. Loan requests must be received at least three weeks prior to the last day of classes for your term of enrollment.
If you are interested in applying for a supplemental loan for a computer of up to $2,000, please submit documentation to us detailing the cost of the computer and printer you have purchased. This computer may not be purchased more than 30 days before the first day of classes and can only be requested once during your three years. A detailed computer loan FAQ is available for further information.
A comparison of the different loan programs can be viewed on our loan comparison chart [PDF]. Further information about private loans can be found online at www.finaid.org/loans/privatestudentloans.phtml.