PLUS Loans

How do my parents apply for a PLUS Loan?

• Direct PLUS Loan — if the school you attend participates in the Direct Loan Program, your parents complete a Direct PLUS Loan application and promissory note, contained in a single form that you’ll get from your school’s financial aid office.
  
• FFEL (Federal) PLUS Loan — if the school you attend participates in the FFEL (Federal) Loan Program, your parents complete a FFEL (Federal) PLUS Loan application, available from your school, lender, or your state guaranty agency. After the school completes its portion of the application, it must be sent to a lender for evaluation.

Although it’s not a requirement, parents are encouraged to have their dependent children file a Free Application for Federal Student Aid (FAFSA), so their children can receive the maximum student aid they’re eligible for.

Can my parents get both a Direct PLUS Loan and a FFEL PLUS Loan for me?

They can apply for either loan for you but not both during the same enrollment period. Your parents could, however, apply for a Direct PLUS Loan for you and a FFEL PLUS Loan for one of your siblings, for example.

What are the borrowing requirements my parents have to meet?

Generally, they have to pass a credit check. If they don’t pass, they might still be able to receive a loan if they can demonstrate that extenuating circumstances exist, or if someone they know—who can pass—agrees to endorse the loan and promises to repay it if your parents don’t.

Are there any other requirements?

You must meet the general eligibility requirements for federal student aid (see here ), and your parents must also meet some of these general requirements. For example, they must be citizens or eligible noncitizens and may not be in default or owe a refund to any FSA program.

Do they need to find a lender?

Direct PLUS Loan — no, the U.S. Department of Education is their lender. Your school assists in administering the Direct Loan Program, however, by distributing the loan application, processing the loan, and disbursing the loan funds.

FFEL PLUS Loan —yes, your parents will need to find a participating lender. For help locating a participating lender, they should contact your school or the guaranty agency serving your state. For that agency's address and telephone number, your parents can contact the Federal Student Aid Information Center at the address or toll-free number found here.

Do they get the money or do I?

Your school first receives the loan funds and might require your parents to endorse a disbursement check and send it back to the school. Your school then applies the loan funds to your tuition, fees, room and board, and other school charges.

If there are any loan funds left over, your parents will receive them either by check or in cash, unless they authorize the funds to be released to you or to be put into your school account. Any remaining loan funds must be used for your education expenses.

Can my parents cancel their loan if they change their minds, even if they've signed the promissory note agreeing to the loan's terms?

Yes, they can cancel just as you can.

Other than interest, is there any other charge involved with a PLUS Loan?

Your parents will pay a fee of up to 4 percent of the loan, just as you would for a Stafford Loan.