Direct PLUS Loan
Direct PLUS Loans are loans parents can obtain to help pay educational costs for their dependent undergraduate students enrolled at least half-time in a degree program. It is not necessary to demonstrate financial need in order to receive a PLUS loan, however students must have filed a Free Application for Federal Student Aid (FAFSA) before a parent can utilize a federal PLUS loan. The maximum PLUS Loan amount that parents can borrow on a yearly basis is the cost of education minus any other financial aid received. Parents must meet established credit criteria.
The interest rate for Direct PLUS is fixed at 7.9%. There is a loan fee of 4% of the principal amount charged for each Direct PLUS Loan that you borrow. The total fee is reduced to 2.5% due to an up-front interest rebate equal to 1.5% of the loan amount. To retain this up front rebate, the first 12 consecutive payments must be made on time. The fee and rebate will be applied before any loan money is received. Parent PLUS loan Borrowers enter repayment 60 days after the date of the final loan disbursement. However borrowers may choose to have repayment deferred while the student for whom the parent borrowed is enrolled at least half-time until six months after the student's final date of half-time enrollment. Interest that accrues during these periods will be capitalized if not paid by the borrower.
To apply for the Direct PLUS loan, parents need to complete a Direct PLUS Loan Request Form available at http://www.studentloans.gov. A parent can log into the website using the PIN used to sign the FAFSA and select "request a PLUS loan." The borrower (the parent) can then indicate the requested loan amount and submit their request for review.
In addition to the request form, all first time PLUS loan borrowers will need to complete a Master Promissory Note (MPN) at the Department of Education website, http://www.studentloans.gov. The MPN can be signed electronically with your federal PIN. If you do not already have a PIN, you can go to http://www.pin.ed.gov.