The new Graduate PLUS (Grad PLUS) loan is the biggest change in graduate financial aid in nearly 15 years.  As a result, many students will no longer be utilizing a commercial loan for their attendance at the Law Center.  Lenders reviewed the regulations and developed different discounting models to provide graduate students competitive loan options.  Since Georgetown Law students will continue to receive special terms on their commercial loans, there is no single answer for all students as to which program is best. 

The Financial Aid Office expects that the majority of students will select the Grad PLUS, but there are valid reasons for choosing a commercial loan.  We have distilled the available data and compiled the information below for your consideration.  Please review this information before making your borrowing choice.  Most l enders have made their applications available online. 

 
How Grad PLUS differs from commercial loans

• The interest rate is fixed for the life of the loan at 8.5%.  Lenders offer repayment programs that will lower this rate – see below
• Offers the same payment deferment and forbearance options as the federal Stafford Loan (e.g. hardship, unemployment (3 years) and in-school (unlimited for ½ time enrollment)).  Most commercial loans only offer one year of forbearance.
• Lenders are required by federal regulation to charge an “origination fee” of 3%. 
• The credit requirement is less stringent than commercial loans
• The interest rate charged is the same for all borrowers
• The Grad PLUS may be consolidated with other federal loans
• The Grad PLUS may be included in the federal loan forgiveness program for government adn non-profit employees.

 

You may prefer the Grad PLUS if:

• You like the certainty that a fixed-rate loan provides
• If your credit is good, fair, or poor, your cost will likely be lower
• You like the protection that the greater deferment and forbearance options provide
• The repayment incentives offered bring the repayment interest rate cost to 7.25% or lower. 

 

You may prefer a commercial loan if:

• You are comfortable with the possibility of interest rates increasing beyond the interest rate cap (8.5%) of the Grad PLUS loan.
• You have top-tier credit – at this point in time, these borrowers will presently be charged less interest, but if interest rates climb, this benefit decreases or disappears altogether.
• You believe that there is very little possibility that you may use the deferment or forbearance options
• You plan to borrow the loan only for a short time.

 

We’ll do the Math if You Don’t Want to

Just tell us what you want and we’ll make the numbers work.  For uniformity in the application process, we recommend that all Law Center students that don’t want to do the fee calculations simply complete the Grad PLUS application request with the lender for the same amount: $50,000.  The Financial Aid Office will certify your individual loan based on the amount you tell us you want to arrive at the Law Center on your Green or Blue Sheet (up to the maximum student budget).  We will do the fee calculation for you.  It does not matter if you request $50,000 or $5 million with the lender since the request is not part of the promissory note.  You are only responsible for the amount disbursed plus fees and interest as it accrues.  On the Green or Blue Sheet, in addition to numerical requested amount values, the “maximum” option is a valid choice. 

 

Revised May 9, 2008)