Federal PLUS loans are for parents of dependent undergraduate students. Borrowers can use PLUS loans to help meet the cost of attendance or cover a student's expected family contribution (the amount of money the government expects the parents and student to provide each year for the student's education).
Interest is money paid to the lender in exchange for borrowing money. Interest is calculated as a percentage of the unpaid principal amount (loan amount) borrowed. The interest rate varies depending on the loan type and (for most types of federal student loans) the first disbursement date of the loan. Please click here to view the current interest rates, or click here to view historical Direct Loan interest rate information.
Most federal student loans have loan fees that are a percentage of the total loan amount. The loan fee is deducted proportionately from each loan disbursement you receive. This means the money you receive will be less than the amount you actually borrow. You're responsible for repaying the entire amount you borrowed and not just the amount you received.
Please click here to view the current loan fees for Direct PLUS Loans.
Subsidized Stafford Loan Interest Rate
College Cost Reduction and Access Act
Congress has passed and the President has signed the Bipartisan Student Loan Certainty Act of 2013, which ties federal student loan interest rates to financial markets. Under this Act, interest rates will be determined each June for new loans being made for the upcoming award year, which runs from July 1 to the following June 30. Each loan will have a fixed interest rate for the life of the loan.
These rates will apply to all new Direct Loans made during indicated timeframe. Please click here to view the current interest rates, or click here to view historical Direct Loan interest rate information.
Stafford and PLUS Loan Program Rebate
Budget Control Act of 2011
On Aug. 2, 2011, Congress passed the Budget Control Act of 2011, which put into place automatic federal budget cuts, known as a “sequester.” While the sequester does not otherwise change the amount, terms or conditions of Direct Loans, the terms of the sequester affect the loan fees charged to Direct Loan borrowers for Direct Subsidized, Direct Unsubsidized and Direct PLUS loans. The amount of the loan origination fee for a loan is determined by the date of the first disbursement of the loan. Any subsequent disbursements, even if made on or after the relevant Oct. 1, have the same loan fee percentage that applied to the first disbursement of that loan. Please click here for more information about loan fees.
For latest announcements regarding the federal student aid programs, please visit the Federal Student Aid website.
There are no set limits for Direct PLUS Loans, but a parent may not borrow more than the cost of their child's education minus any other financial aid received, such as a Direct Subsidized or Unsubsidized Loan. We will determine the actual amount you may borrow.
The interest rate for Direct PLUS Loans is fixed. Interest is charged on Direct PLUS Loans during all periods, beginning on the date of your loan's first disbursement. To find out more information on interest rates for Direct PLUS Loans, please click here.
In addition to interest, you pay a loan origination fee that is a percentage of the principal amount of each Direct PLUS Loan that you receive. This fee helps reduce the cost of making these low-interest loans. We deduct the fee before you receive any loan money, so the loan amount you actually receive will be less than the amount you have to repay.
Dependent students whose parents have applied for but were unable to get a PLUS Loan are eligible to receive additional Direct Unsubsidized Loan funds.
- be a dependent undergraduate student;
- be enrolled in at least half-time with established financial need;
- be enrolled in an undergraduate degree or certificate program at an eligible institution;
- have completed a FAFSA and be eligible to receive federal financial aid.
To take out a PLUS Loan for the first time, the parent must complete a PLUS Application and master promissory note (MPN) online at the StudentLoans.gov website. The MPN is a legal document in which you promise to repay your loan(s) and any accrued interest and fees to the Department. It also explains the terms and conditions of your loan(s).
A parent may complete the MPN electronically, you can do so online at the StudentLoans.gov website. If you are borrowing Direct PLUS Loans for more than one student, you'll need to complete a separate MPN for each one. To complete an MPN online, you will be required to use your Department of Education-issued FSA ID (not your child's). If you do not have a FSA ID, you may request one from the official FSA ID site.
In most cases, once you've submitted the MPN and it's been accepted, you won't have to fill out a new MPN for future loans you receive to pay for the educational expenses of the same student. You can borrow additional PLUS Loans on a single MPN for up to 10 years at the same school.
You'll receive a disclosure statement that gives you specific information about any loan that the school plans to disburse under your MPN, including the loan amount and loan fees, and the expected loan disbursement dates and amounts.
To be eligible for a PLUS Loan, the parent must not have an adverse credit history, which the Department of Education will check for when you apply for the loan. If you are found to have an adverse credit history, you may still borrow a PLUS Loan if you get an endorser who does not have such a history. An endorser is someone who agrees to repay the loan if you do not. The endorser may not be the student on whose behalf a parent obtains a PLUS Loan. In some cases you may also be able to obtain a PLUS Loan if you document to our satisfaction that there are extenuating circumstances related to your adverse credit history.
In addition, parents and their dependent child must be U.S. citizens or eligible noncitizens, 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. You can find more information about these requirements he Federal Student Aid website.
Once the PLUS loan application has been processed by our office and MPN received, disbursement will begin during the first week of classes. When funds have been disbursed, they will be applied to the student's account to cover charges. If a credit balance is created, funds will be refunded to the student's refund preference.
In order to maintain eligibility, students must be enrolled at least half-time at the time of disbursement and meet all Satisfactory Academic Progress requirements.
There is no grace period for a Direct PLUS Loan — the repayment period begins 60 days after your school makes the last disbursement of the loan. However, if you're a parent PLUS borrower who is also a student, you can defer repayment while you're enrolled in school at least half time and (for Direct PLUS Loans first disbursed on or after July 1, 2008) for an additional 6 months after you graduate or drop below half-time enrollment.
If you're a parent PLUS borrower, you can defer repayment of Direct PLUS Loans first disbursed on or after July 1, 2008, while the student for whom you obtained the loan is enrolled at least half time, and for an additional 6 months after the student graduates or drops below half-time enrollment (half-time enrollment status is determined by your child's school). You must separately request each deferment period.
Generally, you'll have from 10 to 25 years to repay your loan, depending on the repayment plan that you choose. You can choose to repay your PLUS Loan using the standard, extended, or graduated repayment plan. Read more about these repayment plans.
Your loan servicer will notify you of the date your first payment is due. If you do not choose a repayment plan, your loan servicer will place you on the standard plan, with fixed monthly payments for up to 10 years. Most Direct Loan borrowers choose to stay with the standard repayment plan, but there are other options for borrowers who may need more time to repay or who need to make lower payments at the beginning of the repayment period.
You can change repayment plans at any time by contacting your loan servicer.
If you have multiple federal education loans, you can consolidate them into a single Direct Consolidation Loan. This may simplify repayment if you are currently making separate loan payments to different loan holders, as you'll only have one monthly payment to make. There may be tradeoffs, however, so you'll want to learn about the advantages and possible disadvantages of consolidation before you consolidate. To learn more, visit the Direct Consolidation Loan website.
Automated payments (electronic debit)
When you receive your first bill, you'll learn how to sign up for the electronic debit account (EDA) option and have your bank automatically make your monthly loan payments for you from your checking or savings account. You won't have to write checks, use stamps, or worry if your payment will get to us by the due date. In addition, there is a 0.25 percent reduction in the interest rate on your loans during any period when your payments are made through EDA.
Trouble making payments
If you're having trouble making payments on your loans, contact your loan servicer as soon as possible. Their staff will work with you to determine the best option for you. Options include:
- Changing repayment plans.
- Deferment, if you meet certain requirements. A deferment allows you to temporarily stop making payments on your loan.
- Forbearance, if you don't meet the eligibility requirements for a deferment, but are temporarily unable to make your loan payments. A forbearance allows you to temporarily stop making payments on your loan, temporarily make smaller payments, or extend the time for making payments. Read more about deferments and forbearance.
If you stop making payments and don't get a deferment or forbearance, your loan could go into default, which has serious consequences (see below).
Your loan becomes "delinquent" if your monthly payment is not received by the due date. If you fail to make a payment, we'll send you a reminder along with the servicer of your loans that your payment is late. If your account remains delinquent, we'll send you warning notices reminding you of the consequences of default and of your obligation to repay your loans.
If you are delinquent on your loan payments, contact your loan servicer immediately to find out how to bring your account current. Late fees may be added, and your delinquency will be reported to one or more national consumer reporting agencies (credit bureaus), but this is much better than remaining delinquent on your payments and going into default.
Consequences of default
If you default:
- You will be required to immediately repay the entire unpaid amount of your loan.
- The Department of Education may sue you, take all or part of your federal and state tax refunds and other federal or state payments, and/or garnish your wages so that your employer is required to send us part of your salary to pay off your loan.
- You will be required to pay reasonable collection fees and costs plus court costs and attorney fees.
- You may be denied a professional license.
- You will lose eligibility for other federal student aid and assistance under most federal benefit programs.
- You will lose eligibility for loan deferments.
- Your default status will be reported to the national consumer reporting agencies (credit bureaus).
For more information and to learn what actions to take if you default on your loans, see the Federal Student Aid website for Understanding Delinquency and Default.