What is a Federal Direct PLUS Loan?
The Federal Direct PLUS Loan Program is available to parents of undergraduate students, if they are credit-worthy applicants. A parent of an undergraduate student may borrow up to the total Estimated Cost of Attendance less financial aid resources received by the student. The U.S. Department of Education is the lender for the Direct PLUS Program.
Because the funding for Federal Direct PLUS Loans comes straight from the U.S. Department of Education, parents do not have to find a lender to borrow through this program. Please disregard any offers you may receive about the Federal PLUS Loan program offered through a bank or other lender. Since Eastern Michigan University is a Federal Direct Lending university, you may not use a private lender to apply for a Federal Direct PLUS Loan.
How to apply for PLUS
- Complete a FAFSA (Free Application for Federal Student Aid).
- Complete a PLUS Loan Application at www.studentloans.gov (login with PARENT information: social security number and FAFSA PIN)
Federal Direct PLUS Loan Limits
The maximum Parent PLUS Loan your parents may borrow per academic year is equal to your cost of attendance minus other financial aid (including Federal Direct Subsidized and/or Federal Direct Unsubsidized Loans for which you are eligible). There is no aggregate maximum loan limit for the Parent PLUS Loan.
The Federal Direct Parent PLUS Loan is a fixed-rate loan with a 7.9% interest rate effective July 1, 2006. Interest will begin to accrue as soon as the loan disburses.
The Federal Direct PLUS Loan Program requires a 3% origination fee and a 1% default fee. There's an up-front rebate of 1.5%, so the net disbursement is 97.5% of the gross loan amount. The borrower must make the first 12 payments on time to keep the up-front rebate.
The first payment is due within 60 days after each loan is fully disbursed.
Your parents have the option of deferring repayment based on your enrollment status. Specifically, parent PLUS borrowers may defer repayment:
- While you, the student, are enrolled on at least a half-time basis, and
- During the 6-month period after you cease to be enrolled on at least a half-time basis
Parent borrowers must call the Direct Loan Servicing Center (DLSC) at (800) 848-0979 to request a deferment. Currently there is no available deferment form that a parent borrower may use to request this deferment, however there will be one in the future that will be available on the Direct Loan web site.
* Please note that if your parent does not choose to defer payment, repayment begins 60 days after full disbursement of the loan.
Therefore, the first payment of a fall/winter loan will usually be due in February. Interest begins to accumulate when the first disbursement is made. You may contact the servicer and request forbearance of the principle.
Interest will be capitalized until repayment begins. If a deferment is chosen, your parent will be sent a quarterly interest statement and will have the option of paying the interest as it accrues during the deferment period. Your parent may be allowed up to thirty years for repayment.
You have the right to cancel all or part of your federal loan disbursement for each quarter. Submit a request to the Office of Financial Aid within 14 days from the date you receive official notification that loan funds have credited to your university account.
Disbursement of the PLUS funds depends on when the loan is approved. By law PLUS funds cannot be disbursed until 10 days prior to the first day of classes each semester. If that date has passed and the approval process has been completed, EMU will generally disburse the funds within 2 days of approval.
Options if PLUS is not approved
These are some options the family may want to consider:
- Parent may be reconsidered and approved with an endorser (co-signer).
- If the student has a FAFSA on file, EMU will automatically award the student an Unsubsidized Stafford loan. The amount will vary based on grade level and financial aid that the student has already received.
- Private alternative loans may be available.
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