Federal PLUS Student Loans - an introduction

College student.Federal Parent Loan for Undergraduate Students) are educational loans made to parents of students. Effective July 1st, 2006, federal law now also allows graduate students and professional degree students to borrow through the PLUS loan program.

Like Federal Stafford loans, PLUS loans can be made through the Direct Loan Program (lender is the U.S. Dept. of Education) or the FFEL program (lender is a private financial institution).

Eligibility for these loans requires minimum credit history standards. These loans are low-interest, fixed-rate loans that are guaranteed by the U.S. Government.

Some of the Federal PLUS loan features:

  • Loans for parents of undergraduate students
  • Loans for graduate or professional students
  • Not based on financial need
  • Can be Direct PLUS Loans (through your School) or FFEL PLUS Loans (through private lenders) depending on your school.
  • Applicant or Co-Signer with minimum credit standards (not currently 90 days or more delinquent and/or history of; default, discharge, foreclosure, repossession, tax lien, wage garnishment, write-ff in last 5 years)
  • Borrow up to students "cost of attendance" minus any other sources of financial aid.
  • Undergraduate (parents), Graduate and Professional students (full or part-time)
  • Up to 10 years to repay (may depend on total amount owed), may be extended up to 25 years depending on the total amount borrowed. Forbearance and discharge are available under certain circumstances.

PLUS Student Loan Details

Interest Rate Details, Fees and Repayment:

Currently, Federal PLUS Loans have a fixed interest rate of 8.5% for FFEL PLUS Loans and 7.9% for Direct PLUS Loans. There is a fee of up to 4% of the loan (deducted directly from the loan), charged with each disbursement of the loan. This fee is used to help guarantee and reduce the cost of the loan program. Some lenders (FFEL PLUS loans) will pay this fee for borrowers. There may be fees/additional costs for late or collection accounts.

Repayment of Perkins loans (both principal and interest) begins after the loan is fully disbursed each academic year (typically after the spring disbursement).

PLUS Loans for Graduate and Professional students require completion of a FAFSA (Free Application for Student Aid) and application for the maximum eligible annual Stafford (Subsidized and Unsubsidized) Loan amounts prior to to applying for PLUS loans.

Maximum Loan Amounts:

  1. Parents of Undergraduate Student: Cost of Attendance minus other financial aid.
  2. Graduate Student: Cost of Attendance minus other financial aid.
  3. Professional Student: Cost of Attendance minus other financial aid.

How to get a PLUS Student Loan

Steps to obtaining a PLUS Loan:

  1. Complete FAFSA (not required for a PLUS Loan, most school will require its completion before approving a PLUS loan):
    1. Obtain Federal Student Aid PIN @ http://www.pin.ed.gov
    2. Complete FAFSA (Free Application for Student Aid) @ http://www.fasfa.ed.gov
  2. Apply for PLUS Loan
    1. Direct PLUS Loans -- complete a Direct PLUS Loan application from your school's financial aid office, the U.S. Dept. of Education is the Lender.
    2. FFEL PLUS Loans -- Apply with Participating Lender.
  3. The Loan Funds will be sent by the lender (U.S. Dept. of Education for Direct PLUS or your private lender for FFEL PLUS) to your school - usually in at least two disbursements. The funds will be first used to pay for tuition, fees, room and board and other fees. Any remaining funds will be sent to the borrower to be used for additional educational expenses.