Higher Education: Characteristics of Graduate PLUS Borrowers

What GAO Found

Graduate PLUS Borrowers: As of June 30, 2017, the median borrower of Graduate PLUS (Grad PLUS) loans—federal loans made to graduate or professional students to pay for educational expenses not covered by other financial aid—had taken out over $140,000 in federal student loans (including Grad PLUS, undergraduate, and other graduate loans). This amount includes a total of nearly $27,000 in Grad PLUS loans. From award years 2007 through 2017, the Department of Education (Education) disbursed approximately $71 billion in Grad PLUS loans to about 1.7 million unique borrowers. Individual Grad PLUS borrowing amounts range from about $5,000 at the 10th percentile of borrowers to $98,554 at the 90th percentile of borrowers. 

To manage their debt, the majority of Grad PLUS borrowers in repayment status as of June 2017 used the Standard 10-year repayment plan. Education also offers Income-Driven Repayment plans that base loan repayment amounts primarily on borrower income. As of June 2017, 36 percent of Grad PLUS borrowers in repayment status had ever participated in Income-Driven Repayment plans. Also, as of June 2017, 11 percent of Grad PLUS borrowers in repayment status had been certified as eligible for the Public Service Loan Forgiveness program, which provides eligible borrowers who work in public service the opportunity to have the balance of their loans forgiven after 120 monthly payments. As of March 2017, 2 percent of borrowers had defaulted on at least one Grad PLUS loan. The most common degree types pursued by Grad PLUS borrowers are master’s degrees and doctoral professional practice degrees, such as a law degree or medical degree. 

Loan Limits: As requested, to identify the potential effect of loan limits on borrowers, GAO modeled several annual and aggregate (lifetime) limits for Grad PLUS borrowing, selected to illustrate a range of alternatives for GAO’s analysis. Grad PLUS loans are not need-based and students can borrow up to the cost of attendance, such as tuition and room and board, minus any other estimated financial assistance. The lowest annual Grad PLUS loan limit GAO modeled ($10,000 per year per borrower) would have reduced loans provided to over 1.2 million borrowers and decreased total Grad PLUS disbursements by approximately $41.6 billion from award years 2007 through 2017. The highest annual limit GAO modeled ($25,000 per year per borrower) would have reduced loans provided to over 600,000 borrowers and decreased total Grad PLUS disbursements by approximately $16.5 billion from award years 2007 through 2017. Based on available Education survey data, the largest groups of borrowers who would be affected by certain lifetime limits would be those in doctoral professional practice programs and those in law and health-related fields of study. 

Why GAO Did This Study

To help students and their families pay for higher education, Education provides billions of dollars in federal student loans each year through programs authorized under Title IV of the Higher Education Act of 1965, as amended. Since July 1, 2006, graduate students have been eligible for Grad PLUS loans to help finance their education. 

GAO was asked to review issues related to Grad PLUS loans and borrowers. This correspondence examines (1) what is known about Grad PLUS borrowers and the loan repayment plans they use to manage their debt, and (2) how the addition of loan limits might affect the number and type of borrowers, and the money awarded for Grad PLUS loans. To address these objectives, GAO analyzed data from Education’s National Student Loan Data System for award years 2007 through 2017. GAO also analyzed data from Education’s Baccalaureate and Beyond data set, a nationally representative survey of students’ education and work experiences post-bachelor’s degree, using the most recent data available that captured students with Grad PLUS loans. To estimate repayment outcomes under certain student loan repayment plans, GAO modeled three scenarios with varying graduate borrowing and income amounts based on Education’s survey data to portray a range of hypothetical borrowers.

For more information, contact Melissa Emrey-Arras at (617) 788-0534 or emreyarrasm@gao.gov.