The Truth About Grad Plus Loans
Like many people applying for a Grad Plus loan I have less then perfect credit, in fact my credit is down right bad. However, I was able to get approved for a Grad Plus loan without a cosigner, I will explain how the process works. Hopefully the information I provide will alleviate some of your Grad Plus induced Stress. Much of the info I will include was quite difficult to obtain, which I why I have decided to make this guide. This guide will benefit those with less then perfect credit more then those with good credit but it will serve as a guide for all those who are applying.

Give yourself PLENTY of time! I recommend starting this process during the early Fall, the year before you intend to go to law school. (If you plan to start school in the fall of 2012 start working on this in the fall of 2011) The early you begin the better off you will be.

Some basic Info about Grad plus loans

They are not credit based in the sense that most loans are. Debt to income ratio and credit scores mean nothing for this loan.
The .gov uses Equifax, this is the reporting agency to focus on
If you have bad credit you will likely be denied, but an appeal is available.

Step 1) Obtain a copy of your credit report from https://www.annualcreditreport.com/ Dispute EVERTHING negative on your report. For collection accounts that I disputed I wrote “ I have no contractual or legal obligation to this creditor” I’m not sure if the aforementioned is true, but it did get nearly all collection agency’s removed from my report.

Step 2) Complete your Grad Plus loan entrance counseling and fafsa at https://studentloans.gov/

Step 3) Complete your MPN (master promissinary note)

Step 4) Apply for your Grad plus loan at http://www.studentloans.gov

Appeal process
I was denied and DID not use the appeal process from the studentloans.gov website. I instead contacted direct loans and asked told them I wanted to start an appeal and gave them my information. Their phone number is 1-800-848-0979.

Here is what they look for when doing a credit check, contrary to popular belief the info you find online and even on their websites is NOT accurate.
(This is directly from a private, direct loans email)

“We can accept documentation that the account(s) is now current, paid-in-full, is less than 90 days past due, charged off, or turned over to collections. The documentation must be on the creditor’s letterhead and specifically reference the account number(s) and be dated. For accounts not paid-in-full, the letter needs to be dated recently. Proof that a payment agreement has been entered into must be accompanied by proof of first payment.
If it is a student loan account, proof of deferment or forbearance is acceptable as long as the student loan account has not gone to collections.
In the case of a mortgage account we can accept documentation showing the account has been rectified either through payment, loan modification, or short sale.”

They do not care about collection accounts or anything as long as you are making payments. If you have a bunch of unpaid debt and you can’t find a cosigner all you need to do is contact the collection agency or creditor and set up a payment plan. Make sure you get this plan in writing and get receipts for anything you pay. Even if you are paying $10 per month on 25k, it doesn’t matter; they just want to see some kind of payment arrangement in place.

There you have it, if you follow this advice you WILL get approved for a grad plus loan. If I was able to get approved then anyone can it approved.