Grad PLUS: To Package or Not to Package

By Beth Maglione, NASFAA Executive Vice President

Brian Drabik, Senior Associate Director of Financial Aid, Northwestern University

Emily Osborn, Director of Financial Aid, Northwestern University Chicago Campus
Keyshia Conner, Director of Financial Aid, University of Arizona - College of Veterinary Medicine
Reyes Aguilar, Associate Dean, College of Law, University of Utah

This Monday afternoon session kicked off with a show of hands, which revealed a divided audience — some who offer Grad PLUS loans as part of the initial financial aid offer and others who do not initially offer Grad PLUS. This division was reflected on the panel, which also represented diversity of packaging strategies.

The panelists outlined some "pros" for packaging Grad PLUS, noting that doing this provides borrowers protection via fixed interest rates, provides them with a variety of helpful repayment options (including IBR), and allows borrowers to continue to qualify for the aid as long as they have educational expenses. 

"Cons" to packaging Grad PLUS however, included the fact that interest rates for Grad PLUS can be higher than private lenders, and private lenders may also offer more favorable repayment plans and incentives.

On the other side of the coin, panelists also outlined some "pros" and "cons" for not packaging Grad PLUS. Pros for not packaging include the fact that this omission allows for a conversation with students about debt and responsible borrowing, may reduce overall debt, and may even encourage more thoughtful borrowing.

Cons for not packaging Grad PLUS include the possibility that students may assume they will not be able to fully cover costs, and that doing this introduces an additional step for students when and if they do eventually accept/apply for loans.

Other key considerations to making this decision in a graduate program include institutional cost of attendance, recruitment and retention efforts, and accreditation and reporting requirements.

The Q&A discussion focused on how the current interest rate environment impacts these decisions and conversations.

"As of Friday, Grad PLUS loan [interest rates] are going up to 7.54%, near pre-COVID levels, and I do feel this is very high," said Emily Osborn, director of financial aid at Northwestern University.  "The hardest group for me are our physical therapy and occupational therapy students. They feel this sense of service and the idea that they will have to borrow $50,000 to $60,000 at 7.54% after several years of lower rates is hard to swallow."


Publication Date: 6/27/2022

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