A Federal Direct Parent Loan (PLUS) is a fixed interest rate installment loan to help parents with good credit, pay for their dependent child's education. A parent may borrow up to the student's costs of education minus any financial aid the student receives during the enrollment period. This loan is in one parent's name and the parent is responsible for repayment on this loan.
Federal Direct Loan Program
Direct Loans are low interest loans for students and parents to help pay for the cost of a student's education after high school. The lender is the U.S. Department of Education rather than a bank or other financial institution.
Eligible PLUS Loan Borrower
- The parent borrower must be the student's biological or adoptive parent. In some cases, the student's stepparent may be eligible.
- The student must be a dependent student who is enrolled at least half-time.
- The parent borrower must not have an adverse credit history. See credit criteria below.
- 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.
Generally, loan money will be disbursed to the student's account in two installments, one at the beginning and one at the midpoint of the dependent student's enrollment period. For parent's of students in the Graduate and Professional Studies program, the PLUS loan will be disbursed before each billing period, depending on a students enrollment.
There is a 4.288% origination fee. Fees will change for loans disbursed starting October 1, 2014 to 4.292%. When calculating your out-of-pocket, add on the fee to what you will need to borrow as that will be deducted from each Federal Direct PLUS loan disbursement.
- First payment of principal and interest on the Federal Direct PLUS loan will be due within 60 days of the final disbursement of the current academic year.
- Interest begins to accumulate when the first disbursement is made.
- The standard repayment plan is 10 years.
- Payments may also be postponed while the student is enrolled (forbearance), up to six months after the dependent student on whose behalf the parent borrowed ceases to be enrolled on at least a half-time basis.
- A Federal Direct PLUS Loan made to the parent cannot be transferred to the student. The parent is responsible for repaying the PLUS Loan.
- Contact Direct Loan Servicing Center at 800-848-0979 for any repayment or forbearance questions.
- The interest rate for Federal Direct Parent PLUS Loans disbursed starting July 1, 2014 is fixed at 7.21%
Prior Federal Loans and Financial Aid History
Federal loans will be submitted to the National Student Loan Data System (NSLDS), and will be accessible by guaranty agencies, lenders, and schools determined to be authorized users of the NSLDS system.
If you currently have a federal student loan and would like to check the interest rate, servicer information, and other financial aid history, go to the National Student Loan Data System (NSLDS) at www.nslds.ed.gov. and use your federal PIN (FAFSA pin) to access your information.
How to apply for a Federal Direct Parent Loan (PLUS)
New and Returning Borrowers
Note - 2014-2015 Federal Parent PLUS Loan application will not be ready until May or June of 2014.
In order to obtain a Federal Direct Parent PLUS Loan, the student must first complete the Free Application for Federal Student Aid (FAFSA).
If you have problems with the Federal PLUS Loan application process you can contact Direct Loan Applicant Services at 1-800-557-7394.
- Go to studentloans.gov and sign in with your federal PIN number (FAFSA PIN) IMPORTANT: The borrowing parent must sign-in using their information and federal PIN.
- Click on Request a PLUS Loan.
- Under "Select the loan type" click on Parent PLUS. Read and complete all sections in each step.
- Review and check consent for credit check and certification of information.
- If the Federal PLUS Loan is credit approved, it will be added to the student's financial aid award once BVU receives the application.
- If the Federal PLUS Loan is credit denied, you may choose to proceed by selecting one of the following credit actions. The PLUS Loan will then be processed based on the chosen credit action.
- Obtain an endorser. An endorser is someone who does not have an adverse credit history and agrees to repay the loan if the borrower becomes delinquent in making payments or defaults on the loan.
- Provide documentation of extenuating circumstances to appeal the credit decision.
- Will not pursue a Federal Direct PLUS Loan. If you choose not to pursue, your student may be eligible to receive additional unsubsidized loan funds. Note - Parents who are denied the Federal Parent PLUS Loan are eligible for Federal Direct Additional Unsubsidized Loan of up to $4000 as a freshman/sophomore and up to $5000 as a junior/senior.
- Undecided. Note: BVU cannot process a loan with an undecided credit action. Any applications that BVU receives with an Undecided credit action will not be processed and the submission of a new application will be required.
Once the Federal Parent PLUS Loan application is submitted, an electronic confirmation will be transmitted to BVU's Financial Aid Office. Please be aware that it may take 24 to 48 hours for BVU to receive your submitted application.
A Master Promissory Note (MPN) must be completed for all parents borrowing a Federal Direct Parent PLUS Loan. The Parent PLUS MPN can be completed at www.studentloans.gov.
The Federal Parent PLUS Loan MPN needs to be completed if the following apply:
- You have never signed a Federal Direct Parent PLUS Loan MPN,
- You signed an MPN more than one year ago but no loan disbursed,
- You signed a MPN more than 10 years ago
- You obtained an endorser due to adverse credit history.
- Parent borrowers must complete and sign a separate MPN for each student for whom they are borrowing.
Detailed instructions from the Department of Education for Completing Parent PLUS Loan Requests