Direct PLUS Loan Program
The borrower must be the student's biological or adoptive parent or the student's stepparent, if the biological or adoptive parent has remarried at the time of application. The student must be a dependent student who is enrolled at least half-time at a school that participates in the Direct Plus Loan Program.
Your son or daughter must first complete the Free Application for Federal Student Aid (FAFSA). Direct PLUS loan borrowers cannot have an adverse credit history (a credit check will be done). In addition, parents and their dependent child must be U.S. citizens or eligible noncitizens, must not be in default on any federal education loans or owe an overpayment on a federal education grant, and must meet other general eligibility requirements for the Federal Student Aid programs.
To apply for the first time, the parent must complete a Direct PLUS Application and master promissory note (MPN). The MPN is a legal document in which the parent promises to repay the Direct Plus loan(s) and any accrued interest and fees to the Department. It also explains the terms and conditions of your loan(s).
When applying for a Direct PLUS Loan, the Department will check credit history. To be eligible for a Direct PLUS Loan, the borrower must not have an adverse credit history. If the borrower is found to have an adverse credit history, one may still borrow a Direct PLUS Loan if they obtain an endorser who does not have an adverse credit history.
There are no set limits for Direct PLUS Loans, but the parent may not borrow more than the cost of the student's education minus any other financial aid received, such as a Direct Subsidized or Unsubsidized Loan. ACM will determine the actual amount parents may borrow.
The interest rate for Direct PLUS Loans is a fixed rate of 6.41%. Interest is charged on Direct PLUS Loans during all periods, beginning on the date of the loan's first disbursement.
In addition to interest, parents pay a loan origination fee of 4% with an upfront rebate of 2.5%. This fee helps reduce the cost of making these low-interest loans. Dependent students whose parents have applied for but were unable to get a Direct PLUS Loan are eligible to receive additional Direct Unsubsidized Loan funds.
Generally, the Direct PLUS loan will cover a full academic year and ACM will make at least two disbursements to the parent.
In most cases, ACM will disburse loan money by crediting it to the student's account to pay tuition, fees, and other authorized charges. If the loan disbursement amount exceeds the student's school charges, ACM will pay the remaining balance of the disbursement directly to the parent by check.
Repayment usually begins 60 days after the loan has been fully disbursed. Parents can elect to delay or defer repayment on the Direct PLUS Loan for the period the student is enrolled on at least a half-time basis and/or for the period that corresponds to the student's 6-month grace period. (This is effective for loans first disbursed on or after July 1, 2008.) Direct PLUS borrowers must separately request deferment for each period. Interest on the Direct PLUS Loan that accrues during the deferment period may be paid by the borrower or capitalized when the deferment period ends.