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Federal Direct PLUS Loans

Direct PLUS Loans are offered to graduate or professional students and to parents of dependent undergraduate student to help pay for  college.

Are there any borrowing requirements my parents must meet?

Yes. To be eligible to receive an undergraduate PLUS Loan, your parent is required to pass a credit check. Graduate or professional students applying for a PLUS loan do not require parent information. The graduate or professional student must pass the credit check. If they don't pass the credit check, they might 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, promising to repay it if your parents should fail to do so.

Your parent might also qualify for a loan even if they don't pass the credit check if they can demonstrate extenuating circumstances. You must meet the general eligibility requirements for federal student financial aid and your parents must also meet some of these requirements. For example, your parents must meet citizenship requirements and may not be in default or owe money to any Student Financial Aid program.

How much can parents borrow?

The yearly limit on an undergraduate PLUS Loan is equal to your cost of attendance minus any other financial aid you receive. For example, if your cost of attendance is $12,000 and you receive $4,000 in other financial aid, your parents could borrow up to $8,000.

NOTE: Your school can refuse to certify your parents' loan application or can certify a loan for an amount less than they would otherwise be eligible for, if the school documents the reason for its action and explains the reason to your parents in writing.

What is the interest rate on PLUS Loans?

The interest rate is variable, but it will never exceed nine percent. The interest rate is adjusted each year on July 1. Your parents will be notified of interest rate changes throughout the life of their loan(s). Interest is charged on the loan from the date the first disbursement is made until the loan is paid in full. To check the current interest rate, visit the Department of Education's Federal Student Aid site.

How will the PLUS Loan funds get to my parent?

For a Direct PLUS Loan, the U.S. Department of Education will send the loan funds to your school. In most cases, the loan will be disbursed in at least two installments (no installment can be greater than half the loan amount).

The funds will first be used to pay for 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 it to be released to you or to be put in your school account. Any remaining loan money must be used for your education expenses.

Will my parent and I be able to cancel a PLUS loan after applying?

Yes. Your school must notify your parents (or yourself, if you are a graduate/professional student who's applying) in writing whenever it credits your account with your Direct Loan funds. This notification must be sent to your parents no earlier than 30 days before and no later than 30 days after the school credits your account.

You (as a graduate/professional student) or your parent may cancel all or a portion of their loan by informing your school that they wish to do so within 14 days following the date your school sends the notice or by the first day of the payment period, whichever is later.

Your school can tell you the first day of your payment period. If you or your parents  receive PLUS Loan funds directly by check, they may refuse the funds by not endorsing the check.

Is there any other charge for a PLUS Loan, beyond interest?

Yes. Your parents (or you, if you're a graduate/professional student) will pay a fee of up to four percent of the loan. This fee is deducted proportionately from each loan payment that's made. For a Direct PLUS Loan, the entire fee goes to the government to help reduce the cost of the loans.

Also, if the parent or the graduate/professional student doesn't make their loan payments as scheduled, they may be charged collection costs and late fees.

When do my parents begin repaying a PLUS Loan?

Generally, repayment begins after the final disbursement (payment) has been issued. Parents or the graduate/professional student may request a deferment if the student is still enrolled at the university. For more information on deferment, see the Federal Student Aid page on this topic.

Is it ever possible to postpone repayment of a PLUS Loan?

Yes. Under certain circumstances, your parents can receive a deferment or forbearance on their loan. Generally, the conditions for eligibility and procedures for requesting a deferment or forbearance that apply to Direct Loans also apply to PLUS Loans. However, since all PLUS Loans are unsubsidized, your parents will be charged interest during periods of deferment or forbearance. If they do not pay the interest as it accrues, it will be capitalized.

Can the loan be canceled?

Yes, in certain circumstances. This is called a "discharge" and it releases your parents from all obligations to repay the loan. See the Department of Education's Federal Student Aid site for more information  on discharge and cancellation.

The loan can't be discharged because you didn't complete the program of study at the school (unless you were unable to complete the program because the school closed); didn't like the school or the program of study; or did not obtain employment after completing the program of study.

How can my parents or I apply for a Direct PLUS Loan?

Your parents or the graduate/professional student must fill out a Direct PLUS Loan Application and the Direct PLUS Loan Master Promissory Note. Because your financial need does not have to be evaluated, it is not necessary for you or your parents to fill out the Free Application for Federal Student Aid (FAFSA) to apply for this loan, unless your school requires it. Learn more about applying for a Direct PLUS Loan at StudentLoans.gov.

Do I need to find a lender?

No. Under the Direct PLUS Loan program, your or your parent's lender will be the U.S. Department of Education. Your school assists the federal government in administering the Direct Loan PLUS Program by distributing the loan application, processing the loan, and disbursing the loan funds.

How do we pay back a PLUS loan?

Your parents can choose the Standard, Extended, or Graduated Repayment Plan.  Visit the Department of Education's Federal Student Aid site for more information about options for repaying a Direct Loan.