Federal Direct Parent Loans
Federal Direct Parent Loan For Undergraduate Students (PLUS)
The Federal Direct PLUS Loan is a loan from the U.S. Department of Education for parents of dependent undergraduate students enrolled at least half-time (6 credits) with a valid FAFSA on file. Federal Aid including loans will be processed based on enrollment in courses applicable towards the student’s degree. The maximum amount a parent may borrow will be the cost of attendance minus all other financial assistance and will be indicated on the MMC financial aid award letter. Parents often elect to limit the amount they borrow to the difference between annual direct costs and other financial aid the student has received. Direct costs are those paid directly to MMC including tuition, fees, and room and board for resident students. Indirect costs consist of all other expenses that relate to attendance at MMC.
PLUS Loan Eligibility Requirements
Parent PLUS loan borrowers cannot have an adverse credit history (a credit check will be done). In addition, parents and their dependent child must be U.S. citizens or eligible noncitizens, must not be in default on any federal education loans or owe an overpayment on a federal education grant, and must meet other general eligibility requirements for the Federal Student Aid programs. You can find more information about these requirements in Funding Education Beyond High School: The Guide to Federal Student Aid available at: https://studentaid.gov
Credit Check and Endorser Alternative
When you apply for a Direct PLUS Loan, the Department will check your credit history. To be eligible for a PLUS Loan, you must not have an adverse credit history. If you are found to have an adverse credit history, you may still have one of the following options:
- Appeal the credit decision –Contact the Department of Education to see if you are eligible to appeal the reason you were declined. Documentation must be submitted directly to the Department and reviewed. You will receive an answer regarding your appeal within 7-10 business days of all required documentation for the appeal being received. If the credit decision is overturned you must notify the financial aid office so that processing can continue.
- Add an endorser to your application – A credit worthy endorser, which is essentially a cosigner, may be added to your PLUS loan application. An endorser is someone who agrees to repay the Direct PLUS Loan if the borrower becomes delinquent in making payments or defaults on the loan. The endorser may log onto https://studentloans.gov and click on the link “Endorse a PLUS loan”. Once the credit has been approved and the endorser addendum completed you must notify the financial aid office so processing can continue.
Plus Loan Fees
Federal Direct PLUS loans, are assessed an origination fee of 4.272% of the total loan. The net disbursement will reflect these fees; the amount credited to the student’s account will be the gross amount of the loan less the origination fee. This fee is determined by the U.S. Department of Education.
How does my parent apply for a federal direct plus loan?
Parent Loan for Undergraduate Students (PLUS) Process
All parent borrowers must have their credit history checked by the Department of Education. Approved borrowers will then have to complete a Master Promissory Note in order to obtain a loan.
- Go to Department of Education website
- Click “Sign In” you will need your FSA ID user name and password to complete. If you do not have a FSA ID or cannot recall it, you can request your FSA ID here.
- Click on Start PLUS process
- If approved complete PLUS MPN
How a PLUS Loan is Disbursed
Generally, a loan will be for a full academic year and MMC will make at least two disbursements. Disbursements will be applied each semester of the academic year at the end of the add/drop period. MMC will disburse the PLUS loan money by crediting it to the student’s account to pay tuition, fees, room, board, and other authorized charges. If the loan disbursement amount exceeds the student’s school charges, the school will pay the remaining balance of the disbursement directly to the borrower. The parent can give written permission to MMC to disburse the remaining balance of the PLUS loan money directly to the student. MMC will notify the borrower in writing each time a disbursement of loan funds is made and will provide information about how to cancel all or part of the disbursement.
Students attending the Study Abroad program will have their PLUS loan funds disbursed in two equal disbursements each semester. Disbursements will be applied each semester of the academic year at the end of the add/drop period and at the midpoint of each semester.
Grace Period And Deferment For Parent PLUS Borrowers
Beginning July 1, 2008, parents can request to defer payments on a PLUS loan until six months after the date the student graduates, is no longer enrolled or has dropped below half-time status. Accrued interest is capitalized and can either be paid by the parent borrower monthly or quarterly.
It is important to remember the following:
- MMC will automatically be notified by the federal processor when an MPN or entrance interview has been completed and will send a school certification to the U.S. Department of Education.
- In order for you to receive credit for your loans on your student bill, you must complete the loan process and complete verification if selected.
- Loan funds are traditionally disbursed in two installments, a fall disbursement and a spring disbursement, and applied to your student account.
- Your repayment period varies from 10 to 25 years depending on which repayment plan you choose. You can prepay your student loans at any time without a penalty. You have the right to cancel all or part of your loan until 30 days after disbursement.
Where can I learn about the various Federal Direct Loan programs?
- View this Department of Education website to obtain a copy of Your Federal Student Loans: Learn the Basics and Manage Your Debt which provides detailed information on federal student loan borrower’s rights and responsibilities.
- The U.S. Department of Education’s National Student Loan Data System (NSLDS) provides borrowers access to information on all student loans and/or federal grant amounts, including information on loan status, outstanding balances, and disbursements. Go to NSLDS.