Parents can borrow a PLUS Loan to help pay for a students education expenses if you are a dependent undergraduate student enrolled at least half time in an eligible
program at an eligible school. PLUS Loans are available through the Federal Family Education Loan (FFEL) Program and the William D. Ford Federal Direct Loan (Direct Loan)
Program. Your parents can get either loan, but not both, for you during the same enrollment period. They also must have an acceptable credit history. The Grad PLUS loan is
a non-need credit based loan similar to a private student loan, but with the benefit of having a fixed interest rate and federal guarantee.
For a FFEL PLUS Loan, your parents must complete and submit a PLUS Loan application, available from your school, lender, or your state guaranty agency. After the school
completes its portion of the application, it must be sent to a lender for evaluation.
For a Direct PLUS Loan, your parents must complete a Direct PLUS Loan application and promissory note, contained in a single form that you get from your school’s
financial aid office.
Also, your parents generally will be required to pass a credit check. If your parents don't pass the credit check, they might still be able to receive a loan if
someone, such as a relative or friend who is able to pass the credit check, agrees to endorse the loan. An endorser promises to repay the loan if your parents
fail to do so. Your parents might also qualify for a loan without passing the credit check if they can demonstrate that extenuating circumstances exist. You and
your parents must also meet other general eligibility requirements for federal student financial aid.
The yearly limit on a PLUS Loan is equal to your cost of attendance minus any other financial aid you receive. If your cost of attendance is $6,000, for example,
and you receive $4,000 in other financial aid, your parents can borrow up to $2,000.
Either the U.S. Department of Education (for a Direct PLUS Loan) or your parents’ lender (for a FFEL PLUS Loan) will send the loan funds to your school. Your school
might require your parents to endorse a disbursement check and send it back to the school. In most cases, the loan will be disbursed in at least two installments, and
no installment will be greater than half the loan amount. The funds will first be applied to your tuition, fees, room and board, and other school charges. If any loan
funds remain, your parents will receive the amount as a check or in cash, unless they authorize the amount to be released to you or to be put into your school account.
Any remaining loan funds must be used for your education expenses.
For PLUS Loans disbursed on or after July 1, 2006, the interest rate is fixed (at 7.90 for Direct PLUS Loans and 8.50 percent for FFEL PLUS Loans). For PLUS Loans disbursed
between July 1, 1998 and June 30, 2006, the interest rate is variable and is determined on July 1 of every year. For 2008-2009, the variable rate for these PLUS Loans (in
both the Direct and FFEL programs) is 5.01percent. Interest is charged on a PLUS Loan from the date of the first disbursement until the loan is paid in full.
Your parents will pay a fee of up to 4 percent of the loan, deducted proportionately each time a loan disbursement is made. For a FFEL PLUS Loan, a portion of this fee goes
to the federal government, and a portion goes to the guaranty agency (the organization that administers the PLUS Loan Program in your state) to help reduce the cost of the
loans. For a Direct PLUS Loan, the entire fee goes to the government to help reduce the cost of the loans. Also, your parents may be charged collection costs and late fees
if they don’t make their loan payments when scheduled.
For PLUS loans made to parents that are first disbursed on or after July 1, 2008, the borrower has the option of beginning repayment on the PLUS loan either 60 days after
the loan is fully disbursed or wait until six months after the dependent student on whose behalf the parent borrowed ceases to be enrolled on at least a half-time basis.
Under certain circumstances, your parents can receive a deferment on their loans.
If they temporarily can’t meet the repayment schedule, they may also receive forbearance on their loan, as long as it isn’t in default. During forbearance, their payments
are postponed or reduced. Forbearances are not an entitlement and are granted at the lenders discretion.
Generally, the conditions for eligibility and procedures for requesting a deferment or forbearance apply to both Stafford Loans and PLUS Loans. However, since all PLUS
Loans are unsubsidized, your parents will be charged interest during periods of deferment or forbearance. If they don’t pay the interest as it accrues, it will be capitalized
(that is, added to the principal amount of the loan, and additional interest will be based on that higher amount).
- You may be eligible for a Graduate PLUS loan if you are enrolled in school at least half time.
- A credit check is required.
- You must be a U.S. citizen or national, a U.S. permanent resident, or an eligible non-citizen.
- You must submit a FAFSA form.
- There is no prepayment penalty.
- There are no income or collateral requirements.
- Interest may be tax-deductible.
- You may apply for a Grad PLUS loan to pay for you Graduate higher-education-related expenses The Grad PLUS Loan allows graduate students to borrow the total cost for their graduate school needs, including tuition, room and board, supplies, lab expenses, and travel, less any other aid.
- You must be a U.S. citizen or national, a U.S. permanent resident, or eligible non-citizen.
- A credit check is required.
- There is a 3% origination fee charged by the federal government. Up to a 1% federal default fee is also charged.
Interest
The interest rate for a FFEL Grad PLUS loans first disbursed on or after July 1, 2006 is fixed at 8.5%, and it is 7.9% for a FDLP Grad PLUS loan.
Please note: July 1, 2010 all federal loans must be originated through the Federal Direct Loan Program.