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PLUS Loan (for parents of dependent students)

DESCRIPTION:

Federal Direct PLUS Loans are low-interest loans made to parents (natural parents, adoptive parents, or legal guardians) of dependent undergraduate students enrolled in school at least half time. These loans are not based on financial need. Parents with adverse credit history or who have filed bankruptcy in the past may be denied the PLUS loan. The federal government does not pay the interest on the Federal Direct PLUS Loan.

HOW TO APPLY:

In order to be considered for these loans, the student must file the Free Application for Federal Student Aid (FAFSA) and have the results sent to the VCU Office of Financial Aid, ensuring that information provided on the application is complete and accurate. Failure to resolve any problems with the processing of the application, or delays in resolving the problems, may preclude the student from being considered for these loans. The parent must complete the VCU Financial Aid Federal Direct PLUS Loan Request. If the parent would like to have a preliminary credit decision made before applying for the Federal Direct PLUS Loan, the parent may request it on the application.

ELIGIBILITY CRITERIA:

The natural parent, an adoptive parent, or a legal guardian may borrow a Federal Direct PLUS Loan on behalf of a dependent undergraduate student who is enrolled at least half time. In certain circumstances, a stepparent also may borrow. The Federal Direct PLUS Loan is limited to U.S. citizens and eligible noncitizens. The student must be enrolled in a degree or certificate-granting program. To receive a Federal Direct PLUS Loan, parents will be required to pass a credit check. If they do not pass the credit check, they might still be able to receive a loan if someone, such as a relative or friend who is able to pass, agrees to co-sign the loan, promising to repay it if your parents fail to do so. Additionally, if a parent does not pass the credit check, the student may be eligible for a Federal Direct Unsubsidized Loan.

INTEREST RATES:

Direct Parent Plus Loans first disbursed on or after July 1, 2006, have a fixed interest rate of 7.9%. For more information on interest rates, contact the Direct Loan Servicing Center at (800) 848-0979.

FEES:

There is a 2.5 percent fee deducted from each disbursement of a Federal Direct PLUS Loan. This fee goes to the federal government to help reduce the cost of this loan.

RENEWAL:

Awards cannot be automatically renewed. Parents must apply annually and continue to meet the eligibility requirements listed above.

AWARD AMOUNTS/LOAN LIMITS:

The yearly limit on a Federal Direct PLUS Loan is equal to your cost of education minus any other financial aid for which you are eligible. For example, if your cost of education is $10,000 and you are eligible for $8,000 in other financial aid, your parents could borrow up to $2,000.

PROMISSORY NOTES:

In order to receive Federal Direct PLUS Loan funds, the parent making the PLUS request must complete an electronic Master Promissory Note (eMPN). The parent must complete the PLUS eMPN online at dlenote.ed.gov, using their Personal Identification Number (PIN) issued by the U.S. Department of Education. Parents who do not have a PIN may request one online (http://www.pin.ed.gov).

The eMPN does not show loan amounts because it can serve as the parent's promissory note for future years. The loan amount(s) will be included in the most recent electronic Financial Aid Notification (eFAN). Parent borrowers will receive their PLUS Disclosure Statement from the federal Loan Origination Center for each new loan borrowed. The disclosure statements provide information about the amount of money borrowed, the loan period, and the anticipated disbursement dates. Parents should maintain the statements for their records.

Please note: If an endorser is used on a PLUS loan, the borrowing parent must complete a new PLUS eMPN each year that an endorser is needed on the loan.

Parents may decline or reduce the amount of their original loan request by filling out an Award Acceptance Agreement and Change Form or by notifying the VCU Office of Financial Aid in writing. To avoid incurring interest charges and loan fees, funds must be returned within 120 days of disbursement. The loan fee will be reduced or eliminated in proportion to the amount of the disbursement returned. Please note that parents who do not return their signed promissory note by October 1 will have their Federal Direct PLUS Loan canceled for the academic year.

DISBURSEMENT:

Federal regulations require two disbursements of all Federal Direct PLUS Loans borrowed within an academic year. The first disbursement should be made during the first week of classes, provided that the loan is approved, all necessary documents have been received, and that there are no changes in expected enrollment status. The second disbursement should be made during the first week of classes at the beginning of the second semester for fall/spring loans, provided that all necessary documents have been received and that there are no changes in expected enrollment status.

Refunds are mailed to the loan borrower (the parent). Parents can request to have refunds of the Federal Direct PLUS Loan released to the student by indicating this option on the VCU Financial Aid Federal Direct PLUS Loan Request.

CHANGES IN ENROLLMENT STATUS:

The Federal Direct PLUS Loan will be used to pay your university charges (tuition, fees and room and board) and during the drop period you reduce the number of credit hours to less than full-time, any refund due from this reduction in charges may go to repay the Federal Direct PLUS Loan.

If you use your Federal Direct PLUS Loan to pay your university charges (tuition, fees and room and board) and you withdraw from all of your classes or drop below half time, any refund may go to repay the Federal Direct PLUS Loan.

REPAYMENT:

Parents begin repaying the loan, principal and interest, 60 days after the final loan disbursement is made. Interest on the Federal Direct PLUS Loans begins to accumulate at the time the first disbursement is made.

LENDER:

The lender for the PLUS Loan Program is the Federal Government. The contact information is:

U.S. Department of Education
Borrower Servicing Department
Direct Loan Servicing Center
PO Box 4609
Utica, New York 13504-4609
Telephone #: (800) 848-0983
Web: www.dlservicer.ed.gov
(Note: you will need your federal Personal Identification Number (PIN) to access this site.)

DEFAULT:

For loans repayable in monthly installments, borrowers will be declared in default after 270 days of not making scheduled payments (for loans repayable in less frequent installments, borrowers will be declared in default after 330 days of not making scheduled payments). If you default on a Federal Direct PLUS Loan and the servicer is unable to collect, it will harm your credit rating and the federal government may take action to recover the loan. The student cannot receive further financial aid if you are in default status.

DEFERMENT/FORBEARANCE:

Your parent's monthly Federal Direct PLUS Loan payment may be temporarily suspended if the parent qualifies for a deferment or forbearance. A deferment is a period in which repayment of the principal balance is postponed. During a deferment, the parent is responsible for the interest that accrues on the Federal Direct PLUS and Federal Direct PLUS Consolidation Loans in deferment. If the parent is not eligible for a deferment, the parent may still be eligible for forbearance.

There are several deferment types:

    Economic Hardship Deferment Request
    Education Related Deferment Request
        • Internship/Residency
        • Teacher Shortage Area
        • PLUS borrowers, where student is enrolled at least half time and borrowed a Federal Direct Loan
    In School Deferment Request
        • Engaged in at least half-time studies
        • Engaged in a Graduate Fellowship
        • Engaged in Rehabilitation Training
    Parental Leave/Working Mother Deferment Request
    Public Service Deferment Request
        • Active duty in the Armed Forces
        • Serving full-time Public Health Service
        • Active duty in National Oceanic & Atmospheric Administration (NOAA)
        • Serve in the PEACE CORPS
        • Full-time paid volunteer in ACTION PROGRAMS
        • Full-time volunteer in a TAX-EXEMPT ORGANIZATION
    Temporary Total Disability Deferment Request
    Unemployment Deferment Request

Forbearance is an arrangement to postpone or reduce your parent's monthly Federal Direct PLUS Loan payment amount for a limited and specific period of time in which the parent is charged interest. If the parent indicates a temporary inability, but willingness to pay the loan(s), the parent may ask for or be offered forbearance. The parent must apply and qualify for forbearance and the U.S. Department of Education must approve the request in order for a forbearance to be in effect.

There are several forbearance types:

  • Americorps Forbearance Request
  • General Forbearance Request
  • Internship/Residency Forbearance Request
  • Loan Debt Burden Forbearance Request

For details about deferment/forbearance options, visit www.dlservicer.ed.gov.

(Note: you will need your federal Personal Identification Number (PIN) to access this site).

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Last Updated: 04/05/2002 |questions or comments
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