PLUS Loan Amount

Q: How much can I borrow with a Parent PLUS Loan?

A: The annual limit on a PLUS Loan is equal to the studentís cost of attendance minus any other financial aid the student receives. There is no maximum loan amount, you can request whatever you think the student will need to cover his or her remaining education costs.

However, be aware that the school of attendance will need to approve the final loan amount.
 
Parents of dependent students may apply for a Direct PLUS Loan to help pay their childís education expenses as long as certain eligibility requirements are met. Graduate and professional students may apply for PLUS Loans for their own expenses; click here for details.

To be eligible for a Direct PLUS Loan for Parents:

* The parent borrower must be the studentís biological or adoptive parent. In some cases, the studentís stepparent may be eligible.

* The student must be a dependent student who is enrolled at least half-time at a school that participates in the Direct Loan Program. 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 parent may also still receive a loan if he or she can demonstrate extenuating circumstances.

* 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. For additional information on eligibility requirements, go to the student aid eligibility page.

Additional loan types provided under the Direct Loan Program, include Direct Stafford Loans (for undergraduate and graduate students), Direct PLUS Loans (for graduate and professional degree students), and Direct Consolidation Loans (to combine federal education loan debts into a single loan).

How does a parent get a loan?

For a Direct PLUS Loan, the parent must complete a Direct PLUS Loan Application and Master Promissory Note (MPN). 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. If the parent previously signed an MPN to receive an FFEL PLUS loan, he or she will need to sign a new MPN for a Direct PLUS Loan.

The schoolís financial aid office can provide instructions on applying for a PLUS Loan and may offer the option of completing the PLUS application and MPN online at www.studentloans.gov.

How much can a parent borrow?


The annual limit on a PLUS Loan is equal to the studentís 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 studentís parent can request up to $2,000.

How does the parent get the loan money?


ED will send the loan funds to the studentís 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 studentís 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 studentís account at the school. Any remaining loan funds must be used for the studentís education expenses.

Whatís the interest rate?

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.

Prior Federal Loans and Financial Aid HistoryóStudents and parents may check the interest rate, loan servicing company information, and other financial aid history at the National Student Loan Data System.

Interest rate cap for military membersóIf a parent qualifies under the Service Members Civil Relief Act, the interest rate on loans obtained before entering military service may be capped at 6% during the parentís military service. Parents must contact their loan servicing company to request this benefit.

In addition, we do not charge interest (for a period of no more than 60 months) on Direct Loans first disbursed on or after October 1, 2008, while a borrower is serving on active duty or performing qualifying National Guard duty during a war or other military operation or other emergency, and serving in an area of hostilities qualifying for special pay.

Other than interest, is there a charge to get a PLUS Loan?

The parent will pay a fee of 4% of the loan amount, deducted proportionately each time a loan disbursement is made.

When does the parent begin repaying the loan?


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 at least a half-time basis, and
* for an additional six months after the student ceases to be enrolled at least half-time.

How does the parent pay back the loan?

The parent will repay the loan servicing company listed on the disclosure statement provided when he or she received the loan. The loan servicing company will provide regular updates on the status of the PLUS Loan, and any additional PLUS Loans that a parent receives. The loan servicing company also will be listed in the parentís account at www.nslds.ed.gov.

Repayment PlansóThe Direct PLUS Loan Program for parents offers three repayment plans-standard, extended, and graduated-that are designed to meet the different needs of individual borrowers. The terms differ between the repayment programs, but generally borrowers will have 10 to 25 years to repay a loan. To read more about repayment plans, go to the Repayment Information page on studentaid.ed.gov.

What if a parent has trouble repaying the loan?

Under certain circumstances, a borrower can receive a deferment or forbearance to temporarily stop or lower the payments on a loan. For more information, go to the Repayment Information page on studentaid.ed.gov.

Can the parentís PLUS Loan be transferred to the student so that it becomes the studentís responsibility to repay?

No. A PLUS Loan made to the parent cannot be transferred to the student. The parent is responsible for repaying the PLUS Loan.

Can a PLUS Loan be cancelled (discharged)?

Yes, under certain conditions. A cancellation (discharge) releases the parent from all obligations to repay the loan. For more information, go to the cancellation/discharge page on studentaid.ed.gov.

Under the Loan Forgiveness for Public Service Employees Program, borrowers may have the balance of their loans forgiven if they are employed full-time in a public service job and make 120 payments on their loans during that period. For additional details, go to the Loan Forgiveness for Public Service Employees page on studentaid.ed.gov.