PLUS is a loan for parents of dependent students which is geared to help pay for the cost of education after high school. These Parent Loans are available through the William D. Ford Federal Direct Loan Program; subsequently, the lender is the U.S. Department of Education (the Department).
The applicant 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. Your child must be a dependent student who is enrolled at least half-time at a school that participates in the Direct Loan Program. For financial aid purposes, a student is considered "dependent" if he or she is under 24, unmarried and has no legal dependents at the time the Free Application for Federal Student Aid is submitted. (Exceptions are made for veterans, wards of court and other special circumstances.) If a student is considered dependent, then the income and the assets of the parent have to be reported on the FAFSA.
Parent PLUS Loan borrowers cannot have an adverse credit history (a credit check will be done). In addition, parents and their dependent child must be U.S. citizens or eligible noncitizens, must not be in default on any federal education loans or owe an overpayment on a federal education grant.
To apply for a PLUS Loan from the Federal Direct Loan Program, complete the PLUS request process at: https://studentloans.gov/myDirectLoan/index.action
This process includes a PLUS Application and a Master Promissory Note (MPN). The MPN is a legal document in which you promise to repay your loan(s) and any accrued interest and fees to the Department. It also explains the terms and conditions of your loan(s). To complete MPN, you will be required to use your Department of Education-issued PIN (not your child's). If you do not have a PIN, you may request one from the official PIN site.
Texas State Technical College requires pre-approval prior to originating a PLUS. Parent Loans are divided equally and are disbursed every semester. Parents are required to apply for the PLUS every academic year whether the loan is approved or denied based on the credit check.
If the parent’s credit is approved, the Texas State Technical College (TSTC) Financial Aid Office will originate the loan for the amount that the parent requested, not to exceed the maximum for which the parent is eligible, and will notify the student through a new award letter. The parent may reduce the loan amount by contacting the Financial Aid Office. The loan funds will be applied to the student’s account. Any charges owed to TSTC will be deducted and a refund check will be mailed to the parent. Any remaining loan funds must be used for educational expenses.
If the parent’s credit is denied, the TSTC Financial Aid Office will increase the student’s Unsubsidized Stafford loan and an award letter will be sent. The student will have the right to reduce this loan by contacting the Financial Aid Office.
However, getting an endorser is a way to overcome credit denial and borrow a Parent Loan. An endorser, who has good credit and agrees to repay the loan if the borrower does not, could co-sign the PLUS. Another option to overcome a denial is to submit documentation of extenuating circumstances related to adverse credit history.
For assistance filling out the Parent Loan application or the Promissory Note, please call the Applicant Services Department at 800-557-7394. For information regarding loan or disbursement status and any other general questions, please contact the TSTC Financial Aid Office at your local campus.
QUESTIONS AND ANSWERS ON PARENT LOANS for UNDERGRADUATE STUDENTS (PLUS):
How much can my parents borrow?
The yearly limit on a PLUS Loan is equal to your cost of attendance minus any other financial aid you receive. If your cost of attendance is $20,000, for example, and you receive $4,000 in other financial aid, your parents can borrow up to $16,000. Parents can indicate the amount they wish to borrow at the time they apply for a loan. They also have the right to reduce the loan amount.
Who gets my parents’ loan money?
The U.S. Department of Education will send the loan funds to your school. In most cases, there will be at least one loan disbursement per semester. The funds will first be applied to the student’s tuition, fees, room and board, and other school charges. If any loan funds remain, your parents will receive the amount as a check. Any remaining loan funds must be used for your educational expenses.
What’s the interest rate?
The interest rate for Direct PLUS Loans is a fixed rate of 6.41 percent. Interest is charged on a PLUS Loan from the date of the first disbursement until the loan is paid in full. Rates are subject to change. You can obtain current interest information at: Federal Student Aid.
Other than interest, is there a charge to get a PLUS Loan?
Your parents will pay a fee of 4.288 percent loan origination fee on all Direct PLUS Loans first disbursed on or after Dec. 1, 2013. The fee will be proportionately deducted from each loan disbursement. Loans first disbursed prior to Dec. 1, 2013, have different loan fees. This entire fee goes to the government to help reduce the cost of the loans. Also, your parents may be charged collection costs and late fees if they don’t make their loan payments when scheduled.
When do my parents begin repaying the loan?
For PLUS Loans made to parents that are first disbursed on or after July 1, 2008, the borrower has the option of beginning repayment on the PLUS Loan either 60 days after the loan is fully disbursed or wait until six months after the dependent student on whose behalf the parent borrowed ceases to be enrolled on at least a half-time basis.
How do my parents pay back these loans?
They’ll repay their Direct PLUS Loan to the U.S. Department of Education’s Direct Loan Servicing Center. To read more about repayment options under both programs, read the PLUS Loans section in Funding Education Beyond High School: The Guide to Federal Student Aid.
Is it ever possible to postpone repayment of a PLUS Loan?
Yes, under certain circumstances, your parents can receive a deferment on their loans.
If they temporarily can’t meet the repayment schedule, they can also receive forbearance on their loan, as long as it isn’t in default. During forbearance, their payments are postponed or reduced.
Generally, the conditions for eligibility and procedures for requesting a deferment or forbearance apply to both Stafford Loans and PLUS Loans. However, since all PLUS Loans are unsubsidized, your parents will be charged interest during periods of deferment or forbearance. If they don’t pay the interest as it accrues, it will be capitalized (that is, added to the principal amount of the loan, and additional interest will be based on that higher amount).
Can a PLUS Loan be discharged (canceled)?
Yes, under certain conditions. A discharge (cancellation) releases your parents from all obligation to repay the loan.
Your parents’ PLUS Loan can’t be canceled for these reasons: You didn’t complete your program of study at your school (unless you couldn’t complete the program for a valid reason—because the school closed, for example), you didn’t like the school or the program of study, or you didn’t obtain employment after completing the program of study.
For more information about loan discharge or repayment: If your parents have a Direct PLUS Loan, they should contact the Direct Loan Servicing Center at 800-848-0979, or go to Federal Student Aid.