Federal PLUS Loans to meet students' education costs are available through both
the FFEL Program and the Direct Loan Program.
Parents who have an acceptable credit history can borrow a PLUS Loan to pay the
education expenses of a child who is a dependent student enrolled at least half
time in an eligible program at an eligible school.
How do my parents get a loan?
Your parents fill out a PLUS Loan application, which is available from your school's
financial aid office.
To be eligible to receive a PLUS Loan, your parents generally will be required to
pass a credit check. A parent cannot be turned down for having no credit history-only
for having an adverse one. If your parents don't pass the credit check, they may
still be able to receive a loan if someone, such as a relative or friend who is
able to pass the credit check, agrees to endorse the loan. An endorser promises
to repay the loan if your parents fail to do so. Your parents may also qualify for
a loan without passing the credit check if they can demonstrate that extenuating
circumstances exist. You and your parents must also meet other general eligibility
requirements for federal student financial aid.
How much can my parents borrow?
The yearly limit on a PLUS Loan is equal to your cost of attendance minus any other
financial aid you receive. If your cost of attendance is $6,000, for example, and
you receive $4,000 in other financial aid, your parents can borrow up to $2,000.
Who gets my parents' loan money?
Your school will receive the money in at least two installments. No one payment
may exceed half of the loan amount. Your school might require your parents to endorse
a disbursement check and send it back to the school. The school will then apply
the money to your tuition and fees, room and board, and other school charges. If
any loan money remains, your parents will receive the amount as a check or in cash,
unless they authorize that it be released to you. Any remaining loan money must
be used for your education expenses.
What's the interest rate?
The interest rate on loans disbursed after July 1, 2006 is fixed at at 7.90 for
Direct PLUS Loans and 8.50 percent for FFEL PLUS Loans. The rate for funds disbursed
between July 1, 1998 and June 30, 2006 is variable (adjusted annually), but it will
never exceed 9 percent. Your parents will be notified of interest rate changes throughout
the life of their loan. Interest is charged on the loan from the date of the first
disbursement until the loan is paid.
When do my parents begin repaying the loan?
Generally, the first payment is due within 60 days after the final loan disbursement
for the year. There is no grace period for these loans. Interest begins to accumulate
at the time the first disbursement is made, and your parents will begin repaying
both the principal and interest while you're in school.
For PLUS loans made to parents that are first disbursed on or after July 1, 2008,
the borrower has the option of beginning repayment on the PLUS loan either 60 days
after the loan is fully disbursed or wait until six months after the dependent student
on whose behalf the parent borrowed ceases to be enrolled on at least a half-time
basis.