2011-2012 PLUS Loans

Federal Direct PLUS Loan Facts

• Federal non-need based program
• Borrowed by either the parent of a dependent student or by a graduate student
• Fixed 7.9% interest rate
• Net origination fee of 2.5% after 1.5% up-front rebate for loans first disbursed before 7/1/2012. 4% origination fee for loans first disbursed on or after 7/1/2012 See fees for further details
• Credit check conducted by the U.S. Department of Education to establish eligibility

Federal Direct PLUS Loan for Parent Borrowers:

Who is eligible to borrow a Federal Direct PLUS Loan on behalf of a dependent student?

To borrow a PLUS loan for a dependent student, the parent must be the student’s biological or adoptive mother or father. Both parents may get a PLUS loan as long as the total aid package does not exceed the student’s cost of attendance. A stepparent is also eligible to borrow a PLUS loan if his/her income and assets were listed on the FAFSA. A legal guardian or grandparent is not eligible to borrow a Federal Direct PLUS Loan.

The parent borrower will undergo a credit check with the U.S. Department of Education. Parents with adverse credit, a defaulted Federal student loan, or who owe an overpayment on a Federal Student Aid grant are not eligible. You are considered to have an adverse credit history if you are 90 or more days delinquent on any debt or if, within the last five years, you have defaulted on a federal student loan, or have had a bankruptcy discharge, foreclosure, repossession, tax lien, or wage garnishment.

How does my parent apply for a Federal Direct PLUS Loan?

Parents wishing to borrow a Federal Direct PLUS Loan must complete the following steps:

**NEW** All students whose parent wishes to borrow a Federal Direct PLUS Loan MUST complete a FAFSA.

Go to the Department of Education website. Click the "Sign In" link and follow the instructions to "Request a PLUS Loan". You will need the same Federal Student Aid PIN you used to complete your student's FAFSA. Complete all requested data and authorize the Department of Education to check your credit.

If credit approved, first time Federal Direct PLUS Loan borrowers must complete the Master Promissory Note (MPN). This is completed on the same website: http://studentloans.gov

Once step one is complete, our office will transmit the PLUS Loan request to the Department of Education for final approval.

Upon final approval from the Department of Education, the loan will show as anticipated aid on your student's fee bill. The MPN must be complete before this will occur. Funds for the loan will disburse to your student's account approximately 10 days prior to the start of classes.

How much can my parent borrow?

The PLUS Loan Eligibility amount listed in your award package on the Student Administration System represents the maximum amount your parent(s) can borrow. It represents your Cost of Attendance minus any financial aid you have been offered. Although this amount represents the maximum your parent(s) can borrow, you and your parent(s) should always borrow the minimum amount needed to cover your costs.

We will assume that your parent is borrowing for the full academic year. Therefore your parent should plan to borrow enough up front to cover both fall and spring. To help anticipate your needs, you may complete the Financial Aid Worksheet. If your parent does not plan to borrow for the full academic year, please contact our office in writing to indicate the loan period for which you wish to borrow.

What if my parent is credit denied for the Federal Direct PLUS Loan?

If credit denied, the parent will be presented with three options at the end of the web application process:

• Apply with a credit-worthy endorser to continue with the PLUS Loan process OR
  
  
• Appeal the credit decision from the Department of Education if your parent feels he/she has extenuating circumstances or incorrect information on his/her credit report OR
  
  
• Indicate that he/she will not be pursuing either of the above options. As a result of the PLUS denial, you may be eligible for an additional $4,000 or $5,000 Federal Unsubsidized Direct Stafford Loan. If your parent indicates he/she will not pursue an endorser or an appeal, you will be offered any additional Stafford Loan eligibility via the Student Administration System.
  

Can more than one parent borrow a Federal Direct PLUS Loan for the same year?

Yes, as long as the total amount does not exceed the student's Cost of Attendance. Each parent would need to complete a separate online application and MPN via the studentloans.gov website.

Are there any fees?

In addition to interest, there are fees associated with borrowing a Federal Direct PLUS Loan.

For loans first disbursed before 7/1/2012: The U.S. Department of Education charges a 4% gross fee, then gives borrowers an up-front rebate of 1.5%. This means that you will be charged a net fee of 2.5% of the total amount borrowed each year. This fee is deducted from the loan by the Department of Education before the proceeds are credited to your student account.
IMPORTANT NOTE ABOUT THE UP-FRONT REBATE: The up-front rebate reduces the fee you pay at origination. If you don't make your first 12 monthly payments on time, the U.S. Department of Education will add the 1.5% rebate back to your loan balance.

For loans first disbursed on or after 7/1/2012: The U.S. Department of Education charges a 4% origination fee. This fee is deducted from the loan by the Department of Education before the proceeds are credited to your student account.

When must my parent begin repayment on a Federal Direct PLUS Loan?

Repayment of the Federal PLUS loan principal and interest begins 60 days after the final disbursement for the loan period. Deferments are available for a parent who wishes to postpone repayment while the dependent student is enrolled on at least a half time basis. The parent borrower must contact the Department of Education after the first disbursement at 1-800-848-0979 to make this request. Note that interest continues to accrue on the PLUS loan during periods of deferment or forbearance.

How much will my parent have to pay each month?

For an estimate of your monthly payments, please visit our [ Loan Repayment Calculator].

Federal Direct PLUS Loan for Graduate Student Borrowers:

As a Graduate Student, am I eligible to borrow a Federal Direct PLUS Loan?

If you apply for a Federal Direct PLUS Loan, you will undergo a credit check with the U.S. Department of Education. Borrowers with adverse credit, a defaulted Federal student loan, or who owe an overpayment on a Federal Student Aid grant are not eligible. You are considered to have an adverse credit history if you are 90 or more days delinquent on any debt or if, within the last five years, you have defaulted on a federal student loan, or have had a bankruptcy discharge, foreclosure, repossession, tax lien, or wage garnishment.

How do I apply for a Federal Direct PLUS Loan?

Graduate Students wishing to borrow a Federal Direct PLUS Loan must complete the following steps.
NOTE: Graduate Students MUST have completed a FAFSA for the current aid year in order to be eligible for a Federal Direct PLUS Loan.
Go to the Department of Education website. Click the "Sign In" link and follow the instructions to "Request a PLUS Loan". Complete all requested data and authorize the Department of Education to check your credit.
If credit approved, first time Federal Direct PLUS Loan borrowers must complete the Master Promissory Note (MPN). This is completed on the studentloans.gov website as well.
Once step one is complete, our office will transmit the PLUS Loan request to the Department of Education for final approval.
Upon final approval from the Department of Education, the loan will show as anticipated aid on your fee bill. The MPN must be complete before this will occur. Funds for the loan will disburse to your student account approximately 10 days prior to the start of classes.

Should I accept all of my Federal Direct Stafford Loan eligibility prior to requesting a Federal Direct PLUS Loan?

Yes! The Federal Stafford Loan has a lower interest rate and fees than the Federal Direct PLUS Loan. You should always exhaust your Stafford eligibility prior to borrowing a PLUS loan. The interest rate on a Stafford Loan is 6.8% (compared to 7.9% for a PLUS Loan). The net fees charged on a Stafford Loan are .5% (compared to 2.5% for a PLUS Loan). It is in your best interest to maximize Stafford eligibility before borrowing a PLUS Loan.

What if I am credit denied for the Federal Direct PLUS Loan?

If credit denied, you have two options if you still wish to borrow a PLUS Loan. You will be presented with these options at the end of your web application if denied.

• Apply with a credit-worthy endorser to continue with the PLUS Loan process. OR
  
  
• Appeal the credit decision from the Department of Education if you feel you have extenuating circumstances or incorrect information on your credit report.

Are there any fees?

In addition to interest, there are fees associated with borrowing a Federal Direct PLUS Loan. The U.S. Department of Education charges a 4% gross fee, then gives borrowers an up-front rebate of 1.5%. This means that you will be charged a net fee of 2.5% of the total amount borrowed each year. This fee is deducted from the loan by the Department of Education before the proceeds are credited to your student account.
IMPORTANT NOTE ABOUT THE UP-FRONT REBATE: The up-front rebate reduces the fee you pay at origination. If you don't make your first 12 monthly payments on time, the U.S. Department of Education will add the 1.5% rebate back to your loan balance.

When must I begin repayment on a Federal Direct PLUS Loan?

You have the option of beginning repayment on a Federal Direct Graduate PLUS Loan at any time after disbursement. You may postpone interest and principal payments until 6 months after you cease to be enrolled at least half-time. In most cases, your Graduate PLUS Loan will be automatically deferred while you are in-school. If it is not, you should contact Direct Loan Servicing after the first disbursement to request a deferment.

How much will I have to pay each month?

For an estimate of your monthly payments, please visit our [ Loan Repayment Calculator].