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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.
NEW PLUS LOAN COUNSELING FOR ADVERSE CREDIT
Effective March 29, 2015, the Department of Education has implemented a new PLUS Loan Counseling requirement for PLUS Loan applicants who have been denied due to adverse credit.
If the borrower is later approved for the loan due to an approved Endorser/Co-Signer or due to an appeal based on extenuating circumstances, the borrower will be required to complete the Direct Parent Loan Counseling at www.studentloans.gov. The parent will need to log in using the parent (borrower) name, social security number, and FAFSA pin.
This new requirement applies to parents applying for the Federal Direct PLUS Loan. The PLUS Counseling requirement is in place for each initially denied, then later approved loan. Please be advised if the counseling has not been completed, the loan will not appear on the student's bill as a credit or pay to the account.