Parents of dependent students and students pursuing a graduate or professional degree can borrow from the PLUS Loan program. The terms and conditions applicable to parent PLUS Loans (made to parents of dependent students) also apply to PLUS Loans made to graduate and professional degree students. These terms and conditions include:
- a requirement that the applicant not have an adverse credit history and
- a fixed interest rate of 8.5 percent for FFEL PLUS Loans and 7.9 percent for Direct PLUS Loans.
Unlike parent PLUS applicants, graduate and professional degree student PLUS applicants must file a FAFSA. In addition, graduate and professional degree students must have their annual loan maximum eligibility under the Stafford Loan program determined by the school before they apply for a PLUS Loan.
Direct PLUS Loan:
- The school must participate in the Direct Loan Program.
- Complete a Direct PLUS Loan application and promissory note* contained in a single form from the financial aid office at the school.
FFEL PLUS Loan:
- The school must participate in the FFEL Loan Program.
- Complete a FFEL PLUS Loan application and promissory note,* available from the school, lender or state guaranty agency.* After the school completes its portion of the application, it must be sent to a lender for evaluation.
Although not a requirement if the student will not be receiving any other federal student aid, parents are encouraged to have their dependent children submit a FAFSA so their children can receive the maximum student financial aid they’re eligible for. Graduate and professional degree students applying for a PLUS Loan are required to submit a FAFSA.
PLUS applicants must meet the general eligibility requirements for federal student aid. If a parent is borrowing on behalf of a dependent undergraduate student, the student must also meet these general eligibility requirements. For example, the PLUS applicant and the student must:
- be a United States citizen or eligible noncitizen,*
- not be in default* on a federal student loan, and
- not owe a refund on a federal education grant.
A PLUS Loan applicant should not have an adverse credit history. (A credit check will be conducted.) If a PLUS Loan applicant does have an adverse credit history, he or she might still be able to receive a loan by documenting existing extenuating circumstances or by obtaining an endorser who does not have an adverse credit history. An endorser is someone who agrees to repay the loan if the borrower fails to do so.
Direct PLUS Loan—No. The U.S. Department of Education is the lender. Your school assists in administering the Direct Loan Program by:
- distributing the loan application,
- processing the loan, and
- disbursing the loan funds.
FFEL PLUS Program—Yes. You will need to find a participating lender.
If your school has a preferred lender list, it will give you the option of choosing a lender from that list. Remember that a preferred lender list is only a starting place when shopping for financing.
- Check the terms and fine print carefully. Not all students can take advantage of all the benefits lenders advertise. Choose the loan that offers the best up-front discounts, such as waiving origination and default fees, or other immediate discounts. Benefits that are promised several years down the road usually won’t help you if you consolidate your loans or get into financial trouble.
- Your school or the guaranty agency* that serves your state can help you locate a participating lender.
- For the address and telephone number of your state guaranty agency,* contact the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243).
The maximum PLUS Loan amount that a parent or graduate and professional degree student can borrow is the student’s cost of attendance* minus any other financial aid the student receives.
- The school will first apply the PLUS Loan funds to the student’s school account to pay for tuition, fees, room and board and other school charges.
- If any loan funds remain, they will be sent to the parent borrower, unless the parent authorizes the school to hold the funds or release them to the student.
- Any remaining loan funds must be used for your education expenses.
Yes. A borrower can cancel a PLUS Loan the same way that a borrower would cancel a Perkins or Stafford Loan.
Yes. There is a fee of up to 4 percent of the loan amount.
Repayment of a PLUS loan for graduate or professional degree students begins on the date of the last disbursement. Parent PLUS loan borrowers whose funds were first disbursed on or after July 1, 2008, have the option of delaying their repayment on the PLUS loan either 60 days after the loan is fully disbursed or six months after the dependent student is not enrolled at least half-time. During this time, interest may be paid by the parent or capitalized.*
The information in this guide was compiled in the summer of 2008. For changes to the federal student aid programs since then, visit www.FederalStudentAid.ed.gov and click on "Students, Parents and Counselors."
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