Federal Direct PLUS Loan Program (loans for parents)
- What is a Federal Direct PLUS Loan?
- How much can I borrow?
- Who is eligible to borrow a Federal Direct PLUS Loan?
- How do I apply for a Federal Direct PLUS Loan?
- What if my Federal Direct PLUS Loan is denied?
- How will funds be disbursed?
- How do I cancel or reduce approved loan amounts?
- When do I begin repaying my loan?
- How do I make payments?
If you are interested in the Federal Direct PLUS Loan Program,
PLEASE READ ENTIRE PAGE BELOW CAREFULLY.
A Federal Direct PLUS Loan is a loan for the parents of a dependent student. This enables the parents to borrow funds to assist with their student's education. Parents may borrow up to the student's estimated cost of attendance minus any financial aid.
The current interest rate for Direct PLUS Loans is a fixed rate of 6.31%. There is also a 4.272% loan origination fee on all Direct PLUS Loans first disbursed on or after Oct. 1, 2016. The 2015 interest rate for Direct PLUS Loans was a fixed rate of 6.84%. The fee will be proportionately deducted from each loan disbursement.
REQUIREMENTS: PLEASE NOTE THAT PARENTS APPLYING FOR A FEDERAL DIRECT PLUS LOAN MUST APPLY FOR A FSA ID PRIOR TO THE APPLICATION PROCESS. PARENTS MUST SIGN IN TO https://studentloans.gov WITH THEIR VERIFIED FSA ID.
APPLICATION: Submit the Free Application for Federal Student Aid (FAFSA). FAFSA School Code is 002057.
The Federal Parent Loan for Undergraduate Students (PLUS) lets parents borrow money to cover any costs not already covered by the student's financial aid package, up to the full cost of attendance. There is no cumulative limit.
Eligibility for the PLUS loan depends on a modest credit check that determines whether the parent has an adverse credit history. You're considered to have an adverse credit history if
- you have one or more debts with a total combined outstanding balance greater than $2,085 that are 90 or more days delinquent as of the date of the credit report, or that have been placed in collection or charged off (written off) during the two years preceding the date of the credit report.
- during the five years preceding the date of the credit report, you have been subject to a default determination,
- discharge of debts in bankruptcy,
- tax lien,
- wage garnishment, or
- write-off of a federal student aid debt.
There are two ways that you may still be able to qualify for a Direct PLUS Loan if you are considered to have adverse credit.
- First, you can receive a Direct PLUS Loan if you obtain an endorser (similar to a cosigner) who does not have an adverse credit history. (A credit check will be performed on the endorser.) An endorser is someone who agrees to repay the Direct PLUS Loan if you do not repay it. If you're a parent Direct PLUS Loan applicant, the endorser can't be the child on whose behalf you are borrowing.
- Second, you have the option of trying to qualify by documenting to the satisfaction of the U.S. Department of Education that there are extenuating circumstances related to your adverse credit history.
If you qualify by obtaining an endorser or by documenting to the satisfaction of the U.S. Department of Education that there are extenuating circumstances related to your adverse credit history, you'll also be required to complete PLUS counseling before you can receive a Direct PLUS Loan.
If you apply for a Direct PLUS Loan and are notified that you have an adverse credit history, you'll be given detailed information on the options for qualifying by obtaining an endorser or submitting documentation of extenuating circumstances, along with instructions on how to complete the required PLUS counseling.
In addition, the usual requirements for student and parent eligibility still apply. For example, the student must be enrolled at least half-time and be eligible for federal student aid. Both the parent borrower and the student must be US citizens, nationals or eligible noncitizens. Neither the student nor the parent borrower can have a federal government judgment lien on his or her property. The parent cannot owe an overpayment on a federal education grant or be in default on a previous federal education loan unless he or she has made satisfactory arrangements to repay the grant overpayment or loan. The student is required to be registered with Selective Service, but the parents are not.
If the student's parents are divorced, both the custodial parent and the noncustodial parent are eligible to borrow from the PLUS loan program, provided that the combined amounts borrowed do not exceed the cost-of-attendance minus aid received cap. A stepparent who has not adopted the student can only borrow from the PLUS loan program for as long as he or she is married to the custodial parent (i.e., the stepparent's income and assets would be considered when calculating the dependent student's expected family contribution). A stepparent who is married to the dependent student's non-custodial parent is not eligible to borrow from the PLUS loan program. Legal guardians are not eligible to borrow from the PLUS loan program, nor are aunts, uncles and grandparents.
Students must complete the FAFSA and have a complete financial aid file for the academic year before the Federal Direct PLUS Loan will be awarded. A completed file includes:
- FAFSA results
- Either completion of the IRS Data Retrieval process OR official IRS Federal Tax Return Transcript
- Non-tax filing statement, if applicable
- Verification Worksheet
- Final High School transcript or copy of GED on file in the Admissions Office
- Authorization to Pay Expenses from Financial Aid Form
After the FAFSA has been completed, sign in at https://studentloans.gov and select the Request Direct PLUS Loan option and complete the application.
If your credit has been approved, you will need to complete a Master Promissory Note. The Master Promissory Note (MPN) is a legal document in which one promises to repay loan(s) and any accrued interest and fees to the U.S. Department of Education. It also explains the terms and conditions of your loan(s).
If a dependent student's parents are denied a PLUS loan, the student becomes eligible for increased unsubsidized Stafford Loan limits, the same limits as are available to independent students. Only one parent needs to apply for and be denied a PLUS loan. However, if one parent is denied a PLUS loan and the other is approved for a PLUS loan, the student is not eligible for increased Stafford Loan limits.
ACM will disburse Federal Direct PLUS Loan money by crediting the net amount 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 mail a credit refund check to the parent borrower at the address given on the PLUS application.
The Federal Direct PLUS Loan will be disbursed in at least two payments; no payment may exceed one-half of the total loan amount.
Parents have the right to cancel or change the requested loan amount at any time during the academic year. Click here to cancel or change your loan now.
Repayment begins 60 days after the funds are fully disbursed, and the repayment term is up to 10 years.
Parents have the option of deferring repayment on Parent PLUS loans while the undergraduate student on whose behalf they borrowed the PLUS loan is in-school and for a six-month grace period after the student graduates or drops below full-time enrollment. This change was enacted by the Ensuring Continued Access to Student Loans Act of 2008 (PL 110-227), ECASLA, and is effective for Parent PLUS loans first disbursed on or after July 1, 2008. Payments can also be deferred if the parents are themselves enrolled in college. They will need to submit an application for an in-school deferment.
Note that since the interest on the PLUS loan is not subsidized, it continues to accrue while deferred or in forbearance and is capitalized when the loan enters repayment.
The U.S. Department of Education (ED) uses several loan servicers to handle the billing and other services on loans for the Federal Direct PLUS Loan Program.
When you receive your Direct PLUS Loan, you will be contacted by your loan services. Your loan servicer will provide regular updates on the status of your Direct PLUS Loan and will provide you with information on how and when to repay your loan.