Federal Direct PLUS

The Federal Direct Parent Loan for Undergraduate Student (PLUS) is a loan for the natural parent or adoptive parent of a dependent student. A stepparent may be eligible to borrow if income and assets were reported on the FAFSA. The first step in applying is to complete the FAFSA for the appropriate year. A parent can borrow the total estimated cost of attendance less the student's total financial aid (see student's award letter). If more than one parent wants to borrow a parent loan for the same student, each parent must complete a separate PLUS Loan Pre-Application and EMPN.

Interest Rates

The interest rate for the 2009-2010 year is 7.9% fixed for the life of the loan.

Loan Fees

The U.S. Department of Education charges a 4% loan origination fee for processing your loan. However, Direct Loan borrowers will receive a rebate of 1.5%, reducing the up front fee to 2.5%. Upon entering repayment, borrowers must make their first 12 loan payments on time to keep this benefit. The loan fee is deducted proportionately from each disbursement of your PLUS loan.

2009-2010 PLUS Loan Pre-Application and MPN

There are three steps involved in applying for the PLUS Loan.

  1. Complete the 2009-2010 Parent Loan (PLUS) Pre-Application
  2. If you have to complete a new MPN and do not already have a PIN, apply for a Department of Education PIN.
  3. If you do not have a MPN on file for the 2009-2010 year (or you had an endorser), complete a new EMPN for the PLUS Loan.

In order to prevent delays in processing your Pre-Application please make sure to complete your Pre-Application carefully. Frequent causes of delays in processing include; missing information (citizenship, address information, no amount requested), submitting wrong year Pre-Application (must use Pre-Application for current academic year), incorrect information (wrong social security number, or incorrect citizenship information), and not signing the Pre-Application.

The information we receive on your Pre-Application will be used to create your parent loan. The promissory note you complete is a master promissory note and will serve as your promissory note for the 2009-2010 school year as well as the promissory note for future loans. Direct Loans will notify us when you have completed the MPN. To increase the PLUS loan the borrower can mail or fax a signed, dated letter with the student's name, PID, and specific dollar amount of the increase to our office. No letter can be accepted without the specific dollar amount of the increase.

Credit Checks

In order to borrow a PLUS Loan, the parent has to pass a credit check. Once we have received the Pre-Application and the MPN, the Direct Loan Servicing Center will perform the credit check and notify you and us as to the results. If you have questions about the outcome of the credit check, contact Direct Loan Applicant Services at 1-800-557-7394.

Denied Credit Checks

If you do not pass the credit check, there are three options available to you.

  1. You can work with Applicant Services at 1-800-557-7394 if you believe there was an error made on your credit check.
  2. You can obtain a creditworthy endorser. The endorser would need to pass the credit check, agree to endorse the promissory note, and agree to repay the loan if you would fail to do so.
  3. You can decline the PLUS Loan and allow the student to borrow an unsubsidized loan in the student's own name. Freshmen and sophomores (0 to 89 hours) can borrow up to $4,000 and juniors and seniors (90 or more hours) can borrow up to $5,000 for the school year.

When we are informed by the Federal Direct Loan Servicing Center that the PLUS Loan has been denied, we automatically send the parent borrower a PLUS Credit Check letter. This letter instructs you to tell us what option you are pursuing.

Disbursements

Disbursements are applied to your student's university bill, i.e., student account. PLUS loans are typically disbursed over all quarters of enrollment for the academic year. Any change to the standard disbursement process requires a written request attached with the pre-application. Any refunds resulting from the PLUS Loan go to the parent unless specified to go to the student on the Pre-Application.

Repayments

Initial PLUS Loan repayment begins 60 days after the final disbursement of the loan (repayment can be deferred until six months after the student graduates or is no longer enrolled by contacting the Federal Direct Loan Servicing Center). You can choose the Standard, Extended, or Graduated Repayment Plan. (Repayment Chart) Interest begins to accumulate at the time the first disbursement is made. If you are experiencing difficulty making the scheduled payment, you should contact the Federal Direct Loan Servicing Center at 1-800-848-0979.

Student Eligibility

A student must meet the following requirements before any PLUS Loan proceeds can be disbursed.

  • Enrolled at least half time (six credit hours)
  • Enrolled in a degree-seeking program
  • Making Satisfactory Academic Progress (SAP)