How does it work?

This is how it works, as I know it. Your school will send you a financial award letter. In this letter, they will tell you the cost of attendance, the name and amount of any scholarships/grants you have been awarded and the amount you are eligible to borrow from federal loans, i.e. Perkins, Health Professions Scholarship and Stafford loans. If you are interested in borrowing from these sources, they may direct you to sign promissary notes. Financial aid is usually broken down into semesters. Each semester the school will deduct tution and fees from federal funds and scholarships they recieve on your behalf. If there is anything remaining, they will reimburse you. This is roughly how it works. I am not familiar with the how the GradPlus loan is dispersed, I know you can find your own lender, and the maximum amount you can borrow from Grad plus is the cost of your attendance less money received from the above federal loans/scholarships. This amount is verified to the GradPLUS lender through your school. I am not sure if the GradPLUS lender, mails a check to your school or you. Maybe someone else can answer this for you. Your financial aid department should be able to clear up any specifics for you. Good Luck.

 

About Grad PLUS loans -

How long does it take to receive funds once I am approved?
Since approval happens over the phone before you even receive the application, once you are approved, we still need to send you the application and receive it back with your signature on it. Once we receive your application, the following things take place:

• 1. <LI class=maintextblack>Your application is sent to your school for certification. <LI class=maintextblack>Once your school certifies the application, it is sent back to us. <LI class=maintextblack>We forward it on to the lender for their processing. <LI class=maintextblack>Once the lender receives your application, they verify that all documentation is in place and accurate. Then they forward a copy of your application to the guarantor. <LI class=maintextblack>The guarantor guarantees the loan, collects a fee from the lender. The Department of Education is notified and also collects a fee. Guaranty basically means the guarantor agrees to enforce Department of Education regulations on the lender for your loan. In return, the Department of Education agrees to pay off 95% of the remaining loan balance if you ever default on the loan. <LI class=maintextblack>Once the Department of Education, guarantor, lender, school and borrower have all signed off on the application, your loans are approved for disbursement to the school.
  2. In most cases, if the school year is less than three quarters complete, the lender disburses the first half of approved funds to the school for use during the first semester. After the third quarter mark, the lender disburses any remaining funds that have not been disbursed from the approved amount. Not all scenarios work this way, but this seems to be the norm.

In the above process steps 1 - 6 can take between 1 day and 2 months depending on how efficiently the system is between school, lender, guarantor, etc.