Federal Loans

1. Purpose and Eligibility:

Direct PLUS Loans, also known as Parent PLUS Loans and Graduate/Professional PLUS Loans, are federal loans offered through the U.S. Department of Education. These loans are designed to provide financial assistance to:

• Parents of dependent undergraduate students (Parent PLUS Loans)

• Graduate and professional students (Graduate/Professional PLUS Loans)

PLUS Loans are credit-based, and eligibility depends on the borrower's creditworthiness. Borrowers must not have an adverse credit history to qualify. If they do, they may still be eligible with an endorser (co-signer) or by demonstrating extenuating circumstances.

2. Interest Rates:

Direct PLUS Loans have fixed interest rates that are determined by Congress and can vary from year to year. These rates are generally higher than those for other federal student loans, such as Direct Subsidized and Unsubsidized Loans. Borrowers can check the Federal Student Aid website or contact their loan servicer for the most up-to-date interest rate information.

3. Borrowing Limits:

The borrowing limits for Direct PLUS Loans are not constrained by a student's year in school or the cost of attendance, as they are with other federal loans. Instead, the loan amount can cover up to the total cost of attendance minus any other financial aid received.

4. Credit Check:

To apply for a Direct PLUS Loan, the borrower must undergo a credit check. The credit check assesses the borrower's credit history to determine eligibility. Adverse credit history includes issues like bankruptcies, unpaid collections, and defaults on loans.

5. Repayment Options:

Direct PLUS Loan borrowers have several repayment options available:

• Standard Repayment: Fixed monthly payments over a ten-year term.

• Graduated Repayment: Payments start lower and increase over time.

• Extended Repayment: Fixed or graduated payments over an extended term (up to 25 years).

• Income-Driven Repayment (IDR) Plans: Payments are based on your income and family size, making them more manageable if your income is lower or unpredictable. Click here for more information about IDR plans.

• Public Service Loan Forgiveness (PSLF): If you work in a qualifying public service or nonprofit job and make 120 qualifying payments, your remaining loan balance may be forgiven.

Use this Loan Simulator to see your federal student loan repayment options. You can also learn more about repayment options here.

6. Loan Fees:

Direct PLUS Loans may have loan fees, which are deducted from each disbursement. These fees are typically higher than those associated with other federal loans.

7. Application Process:

To apply for a Direct PLUS Loan, borrowers must complete the PLUS Loan Application and undergo a credit check. Graduate/professional students applying for Direct PLUS Loans must have submitted the Free Application for Federal Student Aid (FAFSA). Parents applying for Parent PLUS Loans for dependent undergraduate students must also ensure the student has submitted the FAFSA.

8. Master Promissory Note (MPN):

Once approved for a Direct PLUS Loan, borrowers must sign a Master Promissory Note (MPN), a legal document outlining the terms and conditions of the loan.

9. Responsibilities of Borrowers:

Direct PLUS Loan borrowers are responsible for:

• Repaying the loan, including interest.

• Informing the loan servicer of any changes in contact information.

• Complying with the terms and conditions of the loan.

• Meeting any loan forgiveness or discharge criteria for which they may qualify.