Federal Direct PLUS Loans for Parents
As the parent of a dependent undergraduate student, you may be eligible for the Federal Direct Parent PLUS Loan if you meet the requirements set forth by the Department of Education, including
- Your student qualifies as your dependent
- You and your student are U.S. citizens, national permanent resident aliens or eligible non-citizens of another type
- Your student is accepted or enrolled (at least half-time) in an undergraduate program leading to a degree, certificate or diploma
- Your student maintains satisfactory academic progress
A Direct PLUS Loan is guaranteed by the federal government. Eligible parents may borrow an amount equal to the cost of education less other aid. This includes tuition, fees, room, board, standard allowances for books, transportation, living expenses and the 4 percent origination fee. Thus, the combination of aid received and the Direct PLUS Loan can cover the full cost of attendance at Point Park.
Federal Direct PLUS Loans for Graduate Students
Full-time graduate student are eligible to borrow additional living allowance funds if needed from the Federal Direct PLUS loan program. The application process is the same as for parents of dependent students. Graduate students are required to complete PLUS entrance counseling in addition to the Master Promissory Note (MPN).
When to Apply for a Direct PLUS Loan
Parents and graduate students should complete the credit check and Master Promissory Note (MPN) of the Federal Plus Loan approximately 30 - 60 days before the start of the semester. The credit check for the Plus Loan does expire after 90 days and a new credit check may result in a loan denial when funds are requested.
How to Apply for a Direct PLUS Loan
Log onto www.studentloans.gov and complete a request for a Direct PLUS Loan. This application will initiate a credit check. If the loan is approved, you will complete an electronic Master Promissory Note (MPN), also at www.studentloans.gov.You will need your Federal Student Aid PIN to sign the promissory note. If you have forgotten your Federal Student Aid PIN, you can go to www.pin.ed.gov to retrieve it.
If a Federal Direct PLUS loan is denied, the borrower has the opportunity to work with the Department of Education to resolve credit issues or reapply with an endorser. The parent also can choose for the student to receive additional Federal Direct unsubsidized loan funds.
A typical Direct PLUS Loan is disbursed in two installments, usually in September and late January. Parents need to authorize a separate credit check each academic year. The first payment typically starts in March, 60 days after the January disbursement. The Direct PLUS Loan is generally repaid over a 10-year term.
The Department of Education offers a forbearance option, which allows you to temporarily stop making a payment, make smaller payments, or extend the time for making payments on your loan due to temporary financial hardship. Forbearance can be granted for no more than 12 months at a time. Therefore, if you wish to extend the forbearance, you must submit a new request each year for a maximum of three academic years. While you are on forbearance your interest accrues and you are responsible for repaying it. If you do not pay the interest as it accrues, it will be capitalized, increasing the amount you will have to repay. You can get more information by reviewing your copy of the Borrower's Rights and Responsibilities Statement or contacting your loan servicer.
Federal Direct Parent PLUS Loans vs. Alternative or Private Loans
The Direct PLUS Loan is a government-backed, no collateral loan available to parents of dependent undergraduate students. As it is a federal direct loan, there are deferment privileges available. Different repayment options are available to borrowers, and multiple Parent PLUS Loans for one or more students can be consolidated. In addition, the Direct PLUS Loan is federally insured against death and disability for both the parent and the student.
Alternative loans are a type of private loan that many lenders offer to students and parents as a means of financing higher education. There are parents who prefer to be a co-borrower on an alternative loan instead of being the primary borrower on the Direct PLUS Loan. A co-borrower is equally liable to repay the loan obligation, and the alternative loan does show on the credit report of both the borrower and the co-borrower. Any delinquencies affect both borrowers’ credit reports. Loan terms will vary by lender.