FEDERAL DIRECT PLUS LOAN FOR PARENTS OF UNDERGRADUATE STUDENTS
The Federal Direct PLUS loan is a loan in the parent’s name to assist their undergraduate dependent student when there is a gap between the cost of attendance and the student’s own financial aid.
- Federal Direct PLUS loans are guaranteed and regulated by the Department of Education.
- Credit approval is required prior to loan origination
- If a parent is not credit approved, the student may be eligible for an additional Federal Direct Unsubsidized loan; this option is not available if an alternative private education loan is denied
- PLUS loans have a fixed interest rate which is capped at 7.9%.
Who May Borrow
- The biological, adoptive, or stepparent of a dependent undergraduate student who meets all the eligibility requirements. Grandparents, other relatives or legal guardians are not eligible for the Parent PLUS loan.Please refer to the Application Process for detailed instructions to apply.
- Students must have a FAFSA on file for the current academic year
- The student must be enrolled at least half-time in a degree seeking program
- Both the student and parent must be a U.S. citizen or an eligible non-citizen
- The student must be making satisfactory academic progress per the policies of the college
- Both the parent and the student cannot be in default on their own federal student loans or owe a refund on any federal grant or loan
Parent PLUS loans for Summer 2013 are part of the 2012-13 academic year. Applications for a Parent PLUS loan for the 2013-14 academic year should not be made until June 1, 2013 or later to avoid expiration of the required credit check prior to the loan being originated. Credit checks are only valid for 90 days.
- Parent signs in at www.studentloans.gov using their information and Federal Pin (not the student’s PIN)
- Click on “Request a Direct PLUS Loan”
- Complete all information and submit request for credit approval
- If approved complete a Federal Direct PLUS Master Promissory Note
- If denied, the school will receive an electronic notification and an additional unsubsidized loan will be offered to the student if they are eligible
Exception: Under certain extenuating circumstances (which must be documented) a parent may be eligible for an automatic denial of the PLUS loan without completing the online credit check. Please contact our office prior to applying for a PLUS loan if you feel that have an extenuating circumstance. Several examples are listed below:
- The parent borrower is incarcerated
- The parent borrower has filed for bankruptcy and is prohibited from borrowing additional loans
- The parent borrower’s income is limited to public assistance or disability benefits
If the parent is not credit approved for the PLUS loan, an increase in the student’s unsubsidized loan will be offered to them. Based on their remaining eligibility for aid, freshman and sophomores may borrow up to an additional $4000 in the unsubsidized loan; juniors and seniors may borrow up to an additional $5000 annually. Students will need to accept, reduce, or decline any additional loan that is offered to them.
- Credit approval will be given to anyone who does not have adverse credit; it is not based on low income, the amount of loan requested, the amount of debt a family has, or a parent’s FICO score. Even parents who do not have a credit history may be approved. A parent will generally be approved for a PLUS loan as long as they do not have adverse credit according to the following conditions:
- Not currently 90 days or more delinquent on any debt
- In the last 5 years, not subject to default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write off of Title IV debt
- The following options are available for parents whose PLUS application is denied:
- Use of an endorser with no adverse credit
- Request an appeal of credit decision based on extenuating circumstances
- Student can request additional unsubsidized Stafford loan based on the PLUS denial
How Much Can the Parent Borrow
- Loan amounts can be up to the student’s cost of attendance minus any other aid that the student has received including other loans
- An origination fee of 4.0% will be deducted from the loan by the Department of Education prior to the disbursement of the loan (you should allow for this deduction when determining the amount you wish to borrow).
- A PLUS loan can be requested for the entire academic year and disbursed equally between the fall and spring semesters (preferable), or it can be borrowed for one semester at a time. Credit approvals/denials expire after 90 days so if an additional loan is requested a new credit check may be required. PLUS loans are also available for the summer semester.
Master Promissory Note
- If a parent receives credit approval, they will also need to complete a Direct PLUS Master Promissory Note at www.studentloans.gov. If a parent is applying for a PLUS loan for more than one student in college, a separate note is required for each student. If more than one parent is applying for a PLUS loan for the same student, each parent must complete a note.
- Repayment of a Direct PLUS loan begins 60 days after the final disbursement of the loan, or may be deferred upon request. Interest will continue to accrue during this time and it is recommended that interest-only payments be made, if possible, to keep the principal amount of the loan from increasing. The current interest rate is fixed at 7.9% and begins to accrue as soon as the loan is disbursed.
- PLUS loans can be consolidated for easier repayment
Extenuating Circumstances for Additional Unsubsidized Loan
If any of the following extenuating circumstances apply and have been documented, a parent may not be required to apply for a PLUS loan in order for their student to be considered for additional unsubsidized loan funds. Please contact our office for further clarification or more information.
- Parent borrower’s only income is from public assistance
- Parent borrower’s only income is from disability benefits
- Parent borrower is currently in active bankruptcy proceedings
- Other unusual circumstances