Federal Direct Parent PLUS Loans
For: All parents of dependent undergraduates regardless of income. Qualification is based solely on good credit. There are no debt-to-income ratio guidelines or employment verification requirements.
Loan Amounts: Parents may borrow up to the total education cost for the year, minus any other financial aid that the student is receiving. The total education cost can include tuition and fees, housing and food, books and supplies, transportation, and living allowance.
Interest Rate: The interest rate for Direct PLUS Loans is first disbursed on or after July 1,2013 through June 30, 2014, the interest rate is 6.41% with an interest rate cap of 10.50%. A federal loan fee of 4.204% will be deducted from the loan proceeds.
- The student completes the Free Application for Federal Student Aid (FAFSA) at http://www.fafsa.gov/ if one has not been submitted for the current year.
- The parent completes the Parent PLUS Loan Request and Parent PLUS Master Promissory Note (MPN), and the student completes undergraduate-level Direct Loan Entrance Counseling. All forms are available online at http://www.studentloans.gov/.
- The Office of Financial Aid receives the Direct Parent PLUS MPN and the approved/endorsed Parent PLUS Loan Record from the U.S. Department of Education and adds the Parent PLUS award to the student's record.
- The student accepts, reduces, or declines the Parent PLUS award amount.
- If the student is registered and all official transcripts are on file with the Office of Admissions, the Office of Financial Aid sends a Direct Parent PLUS Loan origination record to the Department of Education.[EF1]
The Department of Education is responsible for all Parent PLUS Loan credit decisions. Parent PLUS Loan borrowers are required to pass a simplified credit check, meaning that the Department of Education is not looking for a certain credit score or for an extensive credit history but simply the absence of an adverse credit history. Students can view the status of their parents' application by logging in to www.studentloans.gov or by calling Federal Direct Loans at 1-800-848-0979.
The following will cause a Parent PLUS Loan to be denied:
- A current delinquency of 90 days or more; this includes unpaid collection accounts and charge-offs.
- Default in the past five years.
- Defaulted loan that has been claim paid.
- Chapter 7, 11, or 12 bankruptcy (Chapter 13 is OK) in the past five years.
- Discharge in the past five years.
- Foreclosure in the past five years.
- Foreclosure proceedings started.
- Deed in lieu of foreclosure.
- Lease or contract terminated by default.
- Repossession in the past five years.
- Tax lien (county, state, or federal) in the past five years.
- Wage garnishment in the past five years.
- Voluntary surrender in the past five years.
- Write-off of Title IV debt in the past five years.
Parents will receive an immediate approval or denial of their application upon electronic completion as well as the loan reference number, which is needed if the parent wishes to pursue an endorser. The Office of Financial Aid will be notified electronically of the credit decision only if the application was completed electronically. Applications are not approved or denied based on the dollar amount requested; therefore, parents should not complete additional applications once a denial is rendered by the Department of Education. Credit decisions are held for 90 days. Once the loan application is denied, the parent must either find an endorser or appeal the credit decision.
The Office of Financial Aid has no control over or influence on the credit decision rendered by the Department of Education. Any and all correspondence regarding credit appeals and endorsers must be sent to the Department of Education.
Approval for the Parent PLUS loan is loan specific. It is possible to be approved for one loan and denied at a later date for a new loan. Denied parents still have two options to obtain the Parent PLUS Loan:
- Review their credit report (which can be done for free at http://www.annualcreditreport.com/) for possible errors and correct them before appealing directly to the Department of Education.
- Find a creditworthy endorser to co-sign for the loan. This endorser will then be responsible for the loan should the parent default on it at any point during the life of the loan.
Endorsing a Parent PLUS Loan
Steps to be taken by the endorser (these must be completed electronically; paper addenda will not be accepted):
- Sign up for a Federal Student Aid personal identification number (PIN) at http://pin.ed.gov/. A PIN is required to electronically sign the endorser addendum.
- Sign on to http://www.studentloans.gov/. This is the website where the endorser electronically co-signs the loan.
- Click on "Endorse Direct PLUS Loan" (fourth link down, in the center of the page).
- Enter the Loan Reference Number (provided by parent borrower) and follow the instructions.
- Accept or reduce the Parent PLUS Loan amount. This will need to be done prior to the record being sent for certification.
Disbursement: Usually done in two equal amounts at the beginning of each semester and sent directly to the college. A federal origination fee will be deducted from the proceeds.
Repayment: PLUS loan repayment normally begins within 60 calendar days after the loan has been fully disbursed. In certain circumstances, parents may elect to repay the loan on a graduated repayment schedule, making interest-only payments (minimum is based on term of the loan, but at least $50 per month) for a portion of the repayment term.