Life cycle of a Nellie Mae GradPLUS Loan

Graduate student If you're wondering how the this student loan works, check out the life cycle of a Nellie Mae GradPLUS Loan.

 

This is a summary of the Federal PLUS Loan process under the Federal Family Education Loan Program (FFELP). By understanding these basic steps, you will be better prepared to borrow wisely and manage repayment successfully.

  1. Filing the FAFSA
  2. Completing a PLUS application and Promissory Note
  3. Receiving your loan proceeds
  4. While you are in school
  5. Repaying your loan
  6. Paying your loan in full

Stage 1: Filing the FAFSA Graduate and professional students are required to file the Free Application for Federal Student Aid (FAFSA) to receive a Federal PLUS Loan. Nellie Mae recommends you exhaust Federal Stafford Loans before taking a PLUS Loan.

  • File the FAFSA as soon as possible after January 1 of the next academic year. File faster online at www.fafsa.ed.gov.
  • Information from the FAFSA is sent from the federal processing center to your school.
  • Your school sends you a financial aid award letter showing the amount of financial aid for which you are eligible.
  • The difference between your total financial aid package and the school's cost of attendance determines how much you may be eligible to borrow under a PLUS Loan.

Stage 2: Completing a PLUS application and Promissory Note Graduate and professional students must complete the parent and student sections of the PLUS Loan Application and Promissory Note and read the enclosed addendum.

  • Check with your school's financial aid office to find out their preferred process for PLUS Loan applicants.
  • Graduate and professional students can save time by applying online for a PLUS Loan from Nellie Mae.
  • After you submit your PLUS application, Nellie Mae performs a credit check and the school certifies the loan request.
  • Keep your copy of the PLUS Loan Master Promissory Note (MPN) in a permanent record file.

Stage 3: Receiving your loan proceeds Once your GradPLUS Loan application has been approved and processed, the loan funds are sent ("disbursed") to your school on a schedule defined by the school and Nellie Mae.

Starting at disbursement, you can lower your interest rate with Nellie Mae's GradPLUS borrower benefit.

  • Nellie Mae sends your GradPLUS Loan proceeds to your school by paper check or electronic funds transfer.
  • You may be required to endorse the check; the school will contact you if this is necessary.
  • The school first applies your loan proceeds to any outstanding education costs. After your bill has been satisfied, the school sends any remaining funds to you.
  • In general, your GradPLUS Loan will be disbursed in at least two installments (such as half in the fall and half in the spring).

Stage 4: While you are in school Federal PLUS Loans for graduate and professional students do not need to be paid while the student is enrolled in school at least half time.

  • The interest on the GradPLUS Loan is the responsibility of the borrower. You may choose to pay the interest while you're in school or you can let the interest accrue and capitalize (interest is added to the principal of the loan before the start of repayment).
  • You must keep your lender informed about any changes in your enrollment status or expected graduation date.

Stage 5: Repaying your loan Nellie Mae GradPLUS Loan borrowers may choose from several repayment options.

  • Standard repayment: Pay a fixed monthly amount (a minimum of $50) for up to 10 years. The length of repayment depends on the amount borrowed.
  • Graduated repayment: Make lower payments for two or four years, followed by standard principal and interest payments.
  • Income-sensitive repayment: Adjust your monthly payments annually based on your salary.
  • Extended repayment: Take up to 25 years to pay off loans totaling $30,000 or more.

Postponing your student loan payments

  • Deferment is a temporary period when no payment is due. Interest accrues on a PLUS Loan during deferment, but payments can be made or postponed. If your interest payments are postponed, the interest is added on to the principal of your loan (capitalized). GradPLUS Loan payments may be deferred if you remain in or return to school at least half time; participate full time in a graduate fellowship program or in rehabilitation training; are seeking but unable to find full-time employment (maximum three years); or experience economic hardship (maximum three years). Borrowers called to active military status during school or their grace periods are also eligible for student loan deferment.
  • If you are not eligible for deferment but are still unable to make your scheduled student loan payments, you may request forbearance from your lender. Forbearance is a period (granted in 12-month intervals for up to three years) when smaller-than-usual or no payments are required. If no payments are made, interest will accrue and capitalize. Also, you may take forbearance for six months to align repayment with your Stafford Loans.

Stage 6: Paying your loan in full After you make your final loan payment, Nellie Mae will send you a copy of your promissory note confirming that the loan is paid in full.

Nellie Mae also notifies the credit bureaus that you have fully repaid your loan.

Congratulations! You have paid off your GradPLUS Loan!

Apply for the GradPLUS Loan