Grad PLUS loan

A Grad PLUS loan is a US federal Direct PLUS Loan for graduate students, including MBA students. It can cover remaining cost of attendance after scholarships and any unsubsidized Direct Loans. It is a loan with origination fees and interest. It is not aid in the grant sense.

Private MBA loans exist too. PLUS is the federal graduate product people mean when they say “I’ll just borrow the rest.”

How it works

The aid office certifies COA. Scholarships and other loans subtract. PLUS can fill the gap up to COA, subject to a credit check. You cannot use PLUS to borrow a lifestyle above the school’s published budget. That cap is why a too-low living allowance in the official COA is not a gift.

Interest starts accruing. Two years of full-time study plus a six-month grace is a long accrual window. An MBA ROI model that ignores origination fees and capitalized interest understates the bill.

Example: year-one COA $116,000, scholarship $20,000, unsubsidized Direct Loan $20,500. Remaining $75,500 can sit in PLUS if you clear the credit check. Two years of that pattern is roughly $151,000 of PLUS principal before fees and interest. A $160,000 post-MBA base can service that. A $95,000 return-to-sponsor salary is a different conversation.

How it differs

Merit money does not accrue interest. Employer sponsorship can claw back but is not a federal loan. Opportunity cost is not borrowable.

Common errors

Borrowing to COA and then another private loan for a nicer apartment. Treating PLUS as “federal so it is cheap” without reading the rate for that disbursement year. Forgetting origination fees in the ROI sheet.