Federal Direct Parent Loans for Undergraduates (PLUS)
William D. Ford Federal Direct Parent PLUS
(Parent Loan for Undergraduate Students)
Federal Direct PLUS Loans are provided by the federal government to help parents of dependent undergraduate students finance their education. Parents may borrow up to the full annual cost of education less any other financial aid for each dependent undergraduate student.
Interest Rate and Fees
Effective July 1, 2006 the interest rate is fixed at 7.9%. A 4% origination fee is deducted by the government from each loan disbursement. As an incentive to encourage timely repayment of Direct Loans, a 1.5% rebate is offered at the time of disbursement. If a borrower makes all of the first 12 required monthly payments on time, the borrower can keep the rebate for the life of the loan.
Repayment
For PLUS loans disbursed prior to July 1, 2009, repayment of principal plus interest typically begins 60 days after the final disbursement is made. For loans disbursed after July 1, 2009, parents may choose to defer payments until six months after the date the student ceases to be enrolled at least half time. Accruing interest could either be paid by the parent borrower monthly or quarterly, or be capitalized quarterly.
Application
Click here for instructions on competing a Direct PLUS Loan application and a Direct Plus Master Promissory Note (MPN).
When applying for your loan, remember to request the amount of funds for the full academic year. Once your application has been approved with a credit check, we will certify your eligibility and schedule the disbursement of funds directly into the student account at the beginning of each semester.
| Federal PLUS Loan | Alternative Loans |
|
|---|---|---|
| Borrower | Parent of a dependent undergraduate student. | Student is the borrower with a cosigner. |
| Credit Review | Minimal credit review, based on federal standards & credit history. Approval is not based on income, financial need or debt-to-income ratio. | Comprehensive credit review process required. Credit scoring and/or debt to income ratio may be reviewed. |
| Repayment | Parent is responsible for repayment. | Student is responsible for repayment. A co-signer is also equally liable. The loan and payment history are listed on the co-signer’s credit report as well as the student’s. |
| Interest Rate | Current rate is 7.9%. New rate determined July 1. | Variable; can change monthly or quarterly. Usually no cap. |
| Capitalization of Interest | Once at repayment. | Can be as often as monthly. |
| Fees | Up to 4%, deducted proportionately from each disbursement. However, with the 1.5% rebate the fee is actually 2.5%. | Varies by lender. |
| Discharge | PLUS loans are federally insured and are discharged in the event of disability or death. | Alternative loans are not federally insured and may not offer discharge in the event of disability or death. |
| Payment Options | Loans disbursed after July 1, 2008: Payments may be deferred until 6 months after student ceases to be enrolled at least half time. | Payments may be deferred while a student is enrolled at least half-time. |
| Deferment and/or Forbearance | Unemployment and hardship deferments are available. | Unemployment and hardship deferments are generally not available. |
| Consolidation | Can be consolidated in a federal Consolidation Loan. | Limited consolidation options available at a variable rate. |
View more: Tuition and Aid
Connect with us