William D. Ford Federal Direct PLUS Loan
The Federal Direct PLUS Loan is non-need-based loan in the parent’s name, not the student’s. The Direct plus Loan is non-need based and requires credit approval. Eligible parents must be the student’s biological or adoptive parent or the student’s stepparent, if the biological or adoptive parent has remarried at the time of application.
• Completed FAFSA for student (must be done each year)
• U.S. citizen or permanent resident
• Parent must be student’s biological or adoptive parent or the student’s stepparent, if the biological or adoptive parent has remarried at the time of application
• Not have previous defaults on a federal loan
• Student must be enrolled or plan to enroll at least half-time (6 or more credits)
• Student must be maintaining satisfactory academic progress.
• Parent borrower must be credit approved
• Maintain satisfactory academic progress
The credit check process is based on the credit-worthiness of the parent borrower. This loan does not have a debt to income ration requirement. PLUS Loans are available regardless of income or assets, and no collateral is required. If the parent is denied a PLUS based on credit-worthiness, the student is able to borrow an additional $4000 (for freshmen and sophomores) or $5000 (for juniors and seniors) of unsubsidized Stafford. A PLUS denial is required before we can process the additional unsubsidized Stafford.
Per Year Maximum:
Total Cost of Attendance- minus students other financial aid. Example: a standard Cost of Attendance for an on-campus student in 2013-14 is $42,964. If the student receives $25,000 in financial aid, the parent would be eligible for the difference of $17,964 in a Direct PLUS Loan.
The Direct PLUS loan does not have a cumulative maximum. This loan, however, does require credit approval and cannot exceed the per year maximum which is the students Cost of Attendance minus their other financial aid.
Standard repayment is 10 years, but can be extended up to 30 years depending on the repayment plan that is selected. Repayment begins 60 days after the full loan amount is disbursed. The parent borrower is responsible for making payments on this loan while a student is in school. Parent borrowers have the option to defer payments on principal and/or interest for PLUS loans that were originated after July 1, 2008, provided the student is enrolled at least half time each semester (6 or more credits). If the parent borrower wants to defer payments they eill want to call their loan servicer to confirm they have the neccessary paperwork in place for the deferment. Parent borrowers will not be assigned to a servicer until the first disbursement has been made to the student. Parent borrowers will be contacted by the loan servicer at that time.
Direct Loan interest rates are set by Congress and are fixed at 7.9%. Interest on a Direct PLUS Loan begins as soon as the first disbursement is made.
Direct PLUS Loans have a 4.0% origination fee that is deducted from the disbursement amount. (Example: On a $1000.00 loan the student will receive a loan disbursement of $960.00)
On August 2, 2011, Congress passed the Budget Control Act (BCA) of 2011, which put into place an automatic process of “across-the-board” Federal budget cuts, known as the sequester, to take effect if Congress failed to enact legislation to reduce the Federal deficit. Unless Congress acted by March 1, 2013, these budget cuts go into effect.
Since the sequester has gone into effect, as of March 1, 2013, the Department of Education indicates for Direct PLUS Loans where the first disbursement of the loan is after the sequester has taken effect, the current loan fee of 4.0% will increase. The Department of Education presently anticipates that the rate will increase to approximately 4.20%. We will update this information as soon as the official loan fee increase percentage becomes available. (Example of change: On a $1000.00 loan with a 4.2% loan fee the student will receive a loan disbursement of $958.00)