Parent PLUS Loans
Parent PLUS Loan Basics:
As a result of the Health Care and Education Reconciliation Act, beginning July 1, 2010, federal student loans will no longer be made by private lenders under the Federal Family Education Loan (FFEL) Program. Instead, all new federal student loans will come directly from the U.S. Department of Education under the William D. Ford Federal Direct Loan Program. This change does not impact the process of applying for federal grants, loans and work-study or the amount of federal aid that students are eligible to receive.
The Parent Loan for Undergraduate Students (PLUS) is a federal loan for parents to borrow on behalf of their dependent students. The parent PLUS loan has a fixed interest rate of 6.41%. For parents to be eligible to borrow this loan, students are required to be enrolled at least halftime (6+ credit hours) and have submitted the FAFSA. Parents must be a U.S. citizen or an eligible non-citizen and pass a credit check. The PLUS loan has a 4.204% origination fee.
The maximum amount a parent can request in a PLUS loan is the student's cost of attendance minus any other Financial Aid and/or scholarships they are awarded. PLUS loans do not become a final part of the award unless a parent chooses to apply and is approved for the PLUS loan.
Students must be offered their final award notification before a PLUS loan application will be processed. During the application processes parents will indicate the amount of PLUS loan, and the payment method you wish to use. Remaining funds, after a student’s account balance has been paid, can be delivered to either the student via their student account, or the parent in the form of a paper check.
Once Direct Loans receives a PLUS loan application from the school, they will search for a Master Promissory Note (MPN). If you have previously signed a MPN, Direct Loans will match your active MPN which they have on file to your PLUS loan, notify the school and begin disbursement according the disbursement schedule that the school has set up. If you do not have an active MPN, you will receive a request via mail from the Direct Loan Servicer with your MPN electronic and paper signature options.