Federal PLUS Loan Program (For Parents and For Graduate or Professional School Borrowers)

Parent Borrowers

If you are a dependent undergraduate student, your parents may borrow money with low interest for your college education through the Federal PLUS Loan Program (FFELP or Direct Loan). The college you attend will determine through which program your parents can borrow. The financial aid office can tell your parents what they need to do to apply, if they decide to borrow. For more information, refer to the Federal PLUS Loan Program page within the Parent Zone.

Graduate and Professional Student Borrowers

Graduate and professional students may also borrow through the Federal PLUS Loan Program. For more information, refer to the Federal PLUS Loan Program page within the Student Zone's Advanced Degree section.

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, with no grace period. Under the Federal PLUS Loan Program, borrowers may defer the payment of principal under certain circumstances. Borrowers should contact their lenders for more information.

Eligibility

To be eligible, borrowers must

• Meet the same eligibility criteria as those required for the unsubsidized Federal Stafford Loan
• Be subject to a credit check by the lending institution (loans will be denied to borrowers with adverse credit, as defined by federal regulations)
• Meet any further eligibility criteria required by the  lender

Choosing a Lender

When borrowing through the Federal Family Education Loan Program, your loan comes from a lending institution. Borrowers are free to select whichever lender they choose, so you may want to compare the level of benefits and customer service offered by various lenders and choose based on which one best meets your individual needs. There are several factors you may wish to take into consideration, such as whether a lender discounts the federal loan fees, or if rebates or other special discounts are offered for making a series of consecutive, on-time payments.

The U.S. Department of Education (ED) and the Federal Trade Commission (FTC) offer Student Loans: Avoiding Deceptive Offers, which is a free consumer guide for college students (and their families) seeking new loans or consolidating existing loans.

How to Apply

The financial aid administrator at the college determines your parent’s eligibility for the loan and can provide the proper application documents. The lending institution will also have the proper forms available and will either approve or deny each loan application.

A chart, which conveniently outlines FFELP loan limits, interest rates and applicable fees in one document (for loans first disbursed on or after July 1, 2008 through June 30, 2009), is available here at College Zone. Specific details regarding each of these topics are provided in the following sections.

Current Interest Rate for Federal PLUS Loans

The current Federal PLUS loan interest rate is fixed at 8.5%.

Loans disbursed prior to July 1, 2006 have a variable interest rate, adjusted annually on July 1, with a maximum of 9%. The Federal PLUS loan variable interest rate for July 1, 2008 - June 30, 2009 is 5.01%.

Loan Limit

The annual maximum amount that can be borrowed 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 federal loan origination fee of three percent of the loan amount is deducted from your Federal PLUS Loan proceeds prior to disbursement. A default fee (formerly the guarantee fee) of one percent of the loan amount is also charged.

For loans guaranteed by ISAC on or after July 15, 2008, ISAC pays one-quarter (25%) of the one-percent federally-mandated default fee for Federal PLUS loan graduate students, but does not pay any portion of the default fee for Federal PLUS loan parent borrowers. The portion of the default fee not paid by ISAC must be paid by either the lender or the borrower. (Continuation of this benefit is subject to periodic review).

Rights and Responsibilities, Repayment, Deferments
 
When you borrow a Federal PLUS Loan, you should be aware of the borrowing basics which are outlined in the Student Zone at collegezone.com.