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As part of the Federal Family Education Loan Program (FFELP), the Federal PLUS Loan Program is a cooperative arrangement between the federal government, ISAC, and lending institutions. The program enables parents to borrow on behalf of their dependent undergraduate students, or graduate and professional students to borrow on their own behalf. All qualified applicants work directly with approved lending institutions to borrow low-interest loans for postsecondary education, if that institution is a program participant. Colleges can also provide potential borrowers with information about participating lenders.
Some schools participate in the Federal Direct Loan Program, under which the federal government acts as the lender instead of commercial lending institutions. The terms and conditions for borrowing under both programs are very similar.
Borrowers who wish to take advantage of this program do not need to demonstrate financial need. Repayment of principal and interest begins within 60 days after the funds are disbursed. Borrowers may defer the payment of principal under certain circumstances and should contact the lender for more information.
Eligibility
Applicants must meet the same eligibility criteria as those required for unsubsidized Federal Stafford loans. Borrowers are subject to a credit check by the lending institution; loans will be denied to those with adverse credit, as defined by federal regulations. It is the lender's option to allow an applicant who fails to meet the credit criteria to obtain a credit-worthy endorser. All loan amounts are subject to the lender's discretion; individual lenders may establish additional eligibility criteria.
How To Apply
This loan program requires the completion of the Federal PLUS Loan Application and Master Promissory Note, which is available from participating ISAC-approved colleges, lending institutions or ISAC.
Graduate and professional student applicants must also complete the Free Application for Federal Student Aid (FAFSA). They must first apply for their maximum annual subsidized and unsubsidized Stafford loan eligibility.
The college's financial aid administrator determines eligibility for the loan. The lending institution either approves or denies each loan application.
Interest Rate
The current interest rate for a Federal PLUS loan disbursed on or after July 1, 2008 is fixed at 8.5%.
Loans disbursed before July 1, 2006 have a variable interest rate adjusted annually on July 1st, with a maximum rate of 9%. The Federal PLUS loan variable interest rate for the period July 1, 2008 through June 30, 2009 is 5.01%.
Loan Limit
The annual maximum amount a parent, graduate or professional student can borrow under the Federal PLUS Loan Program is equal to the Cost of Attendance minus (-) financial aid received. There is no aggregate maximum.
Fees and Disbursements
A default fee not to exceed 1% and a federal loan origination fee of 3% of the loan amount may be deducted from the Federal PLUS loan proceeds prior to disbursement. For FFELP loans guaranteed by ISAC on or after July 15, 2008, ISAC pays one-quarter (25%) of the federally-mandated default fee for Federal PLUS loan graduate students, but does not pay any portion of the 1% default fee for Federal PLUS loan parent borrowers.
Loans are disbursed in at least two installments but qualifying colleges may make single disbursements.for single term loans. The loan proceeds are copayable to the borrower and the institution and are either mailed or electronically transmitted directly to the institution.
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