Federal PLUS Loans to meet students' education costs are available through both the
FFEL Program and the Direct Loan Program. Parents who have an acceptable
credit history can borrow a PLUS Loan to pay the education expenses of a child who
is a dependent student enrolled at least half time in an eligible program at an
eligible school.
How do my parents get a loan?
Your parents fill out a PLUS Loan application, which is available from your school's
financial aid office.
To be eligible to receive a PLUS Loan, your parents generally will be required to
pass a credit check. A parent cannot be turned down for having no credit history-only
for having an adverse one. If your parents don't pass the credit check, they may
still be able to receive a loan if someone, such as a relative or friend who is
able to pass the credit check, agrees to endorse the loan. An endorser promises
to repay the loan if your parents fail to do so. Your parents may also qualify for
a loan without passing the credit check if they can demonstrate that extenuating
circumstances exist. You and your parents must also meet other general eligibility
requirements for federal student financial aid.
How much can my parents borrow?
The yearly limit on a PLUS Loan is equal to your cost of attendance minus any other
financial aid you receive. If your cost of attendance is $6,000, for example, and
you receive $4,000 in other financial aid, your parents can borrow up to $2,000.
Who gets my parents' loan money?
Your school will receive the money in at least two installments. No one payment
may exceed half of the loan amount. Your school might require your parents to endorse
a disbursement check and send it back to the school. The school will then apply
the money to your tuition and fees, room and board, and other school charges. If
any loan money remains, your parents will receive the amount as a check or in cash,
unless they authorize that it be released to you. Any remaining loan money must
be used for your education expenses.
What's the interest rate?
The interest rate on loans disbursed after July 1, 2006 is fixed at 8.5%. The rate
for funds disbursed between July 1, 1998 and June 30, 2006 is variable (adjusted
annually), but it will never exceed 9 percent. Your parents will be notified of
interest rate changes throughout the life of their loan. Interest is charged on
the loan from the date of the first disbursement until the loan is paid.
When do my parents begin repaying the loan?
Generally, the first payment is due within 60 days after the final loan disbursement
for the year. There is no grace period for these loans. Interest begins to accumulate
at the time the first disbursement is made, and your parents will begin repaying
both the principal and interest while you're in school.