Parents of dependent students may apply for a Direct PLUS Loan to help pay their child's education expenses. The annual limit on a PLUS Loan is equal to the student's cost of
attendance minus any other financial aid the student receives. For
example, if the cost of attendance is $6,000 and the student receives
$4,000 in other financial aid, the student's parent can request up to
The Department of Education will send the loan funds to the student's school. In most
cases, the loan will be disbursed in at least two installments, and no
installment will be more than half the loan amount. The school will use
the loan money first to pay the student's tuition, fees, room and board,
and other school charges. If any loan funds remain, the parent will
receive the amount as a check or other means, unless he or she
authorizes the amount to be released to the student or transferred into
the student's account at the school. Any remaining loan funds must be
used for the student's education expenses.
The interest rate is fixed at
7.9%. Interest is charged from the date of the first disbursement until
the loan is paid in full. The parent will pay a fee of 4% of the loan
amount, deducted proportionately each time a loan disbursement is made.
The repayment period for a Direct PLUS Loan begins when the loan is
fully disbursed, and the first payment is due 60 days after the final
disbursement. However, for Direct PLUS Loans with a first disbursement
date on or after July 1, 2008, the parent may defer repayment while the
student on whose behalf the parent borrowed the loan is enrolled on a half-time basis, and for an additional six months after the
student ceases to be enrolled at least half-time.
- The parent borrower must be the student's biological or adoptive parent. In some cases, the student's stepparent may be eligible.
- The student must be a dependent student who is enrolled at least half-time. Generally, a student is considered dependent if he or she is under 24 years of age, has no dependents, and is not married; a veteran, a graduate or professional degree student, or a ward of the court.
- The parent borrower must not have an adverse credit history (a credit check will be done). If the parent does not pass the credit check, the parent may still receive a loan if someone (such as a relative or friend who is able to pass the credit check) agrees to endorse the loan. The endorser promises to repay the loan if the parent fails to do so.
- The student and parent must be U.S. citizens or eligible non citizens, 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.
- The parent must complete a Direct PLUS Loan Application and Master Promissory Note. The MPN is a legal document in which the borrower promises to repay the loan and any accrued interest and fees to the Department. It also explains the terms and conditions of the loan. In most cases, one MPN can be used for loans that a parent receives over multiple academic years although a separate Loan Request must be filed for each school year.