Frequently Asked Questions

1. What is a PLUS loan?
   A parents loan for undergraduate students (PLUS) is a fixed interest rate Federal loan for parents of undergraduate dependent students.
2. What are the features of a PLUS Loan?
   The PLUS Loan is intended to supplement Federal Stafford Loans to cover the student the student’s full cost of attendance. Parents can help fill the financial gap by applying for Federal Student Aid on their student’s behalf.
   Features of the PLUS Loan:
   • The PLUS Loan is an excellent alternative to high interest/cost Private Loans, home equity, savings, retirement, or income to cover a student’s COA.
   • The PLUS Loan is a low interest rate loan that is affordable to most borrowers.
   • The PLUS Loan is part of FFELP and therefore the loan can be consolidated through a Federal Consolidation Loan.
   • The PLUS Loan is part of FFELP and therefore Federal Student Aid benefits apply; deferment, forbearance, and forgiveness.
   • The interest paid on a PLUS Loan may be tax deductible.
   • No prepayment penalties.
   • The PLUS Loan offers borrowers money saving benefits via Borrower Benefits.
3. Who is eligible for a PLUS Loan?
   In order for a parent to obtain a PLUS Loan the parent and student must meet the following eligibility requirements:
   Parent Requirements:
   • Parent must be the natural, step or legally adoptive parent of dependent student
     *Legal guardians are not eligible although they can act as co-signers
   • Parent must be a U.S. citizen or eligible non-citizen
   • Parent must receive mail at a valid U.S. address
   • Parent must be in good credit standing with credit bureaus or obtain an endorser or co-signer
   Student Requirements:
   • Student must be a U.S. citizen or eligible non-citizen
   • The student has completed the FAFSA application
   • The student has been accepted or is enrolled at a participating school.
   • The student is enrolled at least half-time (as defined by the school) at the time of PLUS Loan disbursement
   • The student is obtaining their first bachelor’s degree
   • The student is a dependent of the borrowing parent. Dependent is defined as:
     • The student is under 24 years of age
     • The student is not married or has children
     • The student is not a veteran
4. What are the PLUS Loan limits?
   A Borrower of a PLUS Loan may request loan amounts up to one academic year at a time. The loan amount of the PLUS loan is set to the cost of attendance plus loan fees and minus other Federal Student Aid.
   
   

   Cost of Attendance (COA)

   + Loan Fees

   - Student’s Federal Student Aid

   PLUS Loan Limit

   PLUS loans do not have a maximum cumulative loan limit.
   The requested loan amount is disbursed based on the time frame requested; one academic year, spring semester, etc. The PLUS Loan monies are typically requested one academic year at a time. If the borrower requests a PLUS Loan for one academic year then the loan monies are divided amounts based on the school’s semester, quarter, yearly, etc. method of enrollment.
5. How will the PLUS loan money be disbursed?
   PLUS loan disbursements are sent directly to the school. The school will then verify the student's enrollment and apply the funds toward tuition, room and board, and other additional expenses. If there is any remaining money, it will be sent to the parents unless the school is authorized to release the funds to the student or place them in a school account.
6. How will the loans be disbursed?
   PLUS loans disbursed on or after July 1, 2006 will receive a fixed interest rate of 8.5% before the application of interest rate reduction programs. With MyTuition.com borrower benefits, you may be eligible for an interest rate as low as 6.5%*.

7. Do I have to pay pre-payment penalties on PLUS Loans?
   No. There are no pre-payment penalties. In addition, any amount paid over your minimum payment will be applied directly to principal and not interest.

8. What are the repayment terms of a PLUS loan?
   PLUS Loans are entered into repayment after 30 to 60 days of after full disbursement. Interest begins to accrue on the 1st half of the PLUS Loan upon the initial disbursement. The borrowers may pay the interest or capitalize the interest on the 1st disbursement.
   
   A borrower of a PLUS Loan has up to 10 years to repay (balances over $30K have 25 years to repay) with the FFELP repayment plans:
   • Standard Repayment
   • Graduated Repayment
   • Extended Repayment - offered to borrowers with balances over $30K only
   • Income-Sensitive Repayment
   
   PLUS Loans do not have any early repayment penalty. In addition, any amount paid over the monthly minimum payment is applied directly to principal and not interest.
   
   PLUS Loans are part of the FFEL program. Therefore, deferment, forbearance, disability, and forgiveness Federal Benefits apply.
9. Is it ever possible to postpone repayment of a PLUS loan?
   Yes. Under certain circumstances, parents can receive deferment or forbearance benefits for their loan. If eligible, parents may be able to postpone or reduce their monthly payments.
10. Are there any fees for a PLUS Loan?
    A PLUS Loan may have up to 4% in fees that are collected by the Lender and paid to the Department of Education. Fees are assessed on all Stafford and PLUS Loans and are paid via the lender’s quarterly filing of its Lender Reporting Systems (LaRS) to the DOE. The fees charged help offset the costs of the FFEL program.
    A Borrower of a PLUS Loan incurs two types of fees:
    • Origination Fees-typically 3%
    • Guarantee Fees-typically 1%
    PLUS Loan fees are deducted proportionately from the loan disbursement. The Borrower is not required to come up with any upfront money to obtain a PLUS loan. Fees are deducted from the PLUS Loan disbursement and are typically non-refundable once the loan is disbursed. If a borrower cancels the loan, the fees are refundable.
    
    A Lender can choose to waive the PLUS Loan fees as a Borrower Benefit. A Lender that chooses to waive these fees is paying the fees on behalf of the borrower