What Are Direct PLUS Loans

Direct PLUS Loans are federally-funded loans that are used by graduate students and parents of undergraduate dependent students in order to pay for a portion of college or other type of higher education.

I have FFEL Loans - are these the same as Direct PLUS Loans?

Prior to July 1, 2010, the U.S Department of Education provided funds through the Direct Loan Program, while banks and other private lenders provided funds through the Federal Family Loan Program, or FFEL. (Because the government backed FFEL loans, they were sometimes referred to as federally guaranteed student loans.) As of July 1, 2010, all federal student loans are issued through the Direct Loan Program. What this means is that the U.S. Department of Education is the only provider of funds for all federal student loans. Please note that there are some differences in repayment options for FFEL loans. Click here to read more about FFEL Loans.

Am I eligible for a Direct PLUS Loan?

Parent of a Borrower Eligibility - In order to be eligible to receive this loan for your child, they must meet the general eligibility requirements for federal student aid.

Parents must:

• Be a biological or adoptive parent of the dependent undergraduate student in question OR you may also be the spouse of the parent earning the income that was/would be reported on the FAFSA.
• Not have a bad credit history OR obtain endorser to promise a repayment of loan if you are not able.

Child must:

• Be a U.S. citizen or eligible noncitizen.
• Not be in current default on any other federal education loans, or owe any overpayments on a current federal education grant.
• Be enrolled, or plan to enroll at least half-time at a Direct Loan Program participating school.
• Meet eligibility requirements for the Federal Student Aid Programs.

Graduate/Professional Student Eligibility - In order for you to be eligible to receive this loan, you must:

• Be enrolled, or plan to enroll at least half-time at a Direct Loan Program participating school.
• Be a U.S. citizen or eligible noncitizen.
• Not be in current default on any other federal education loans, or owe any overpayments on a current federal education grant.
• Not have a bad credit history OR obtain endorser to promise a repayment of loan if you are not able.

How do I apply for a Direct PLUS Loan?

Step 1: Complete the FAFSA Application (If you are applying as a parent, your child must complete the FAFSA application

Step 2: Your school will then determine your student aid eligibility.

Step 3: If you are eligible for aid, you will then need to sign a Master Promissory Note, or MPN, that proves you agree to all of the terms of your Direct PLUS Loan.

Step 4: If you are a first time as a Direct PLUS Loan borrower, you are required to complete an entrance counseling session to make sure you understand that you are obligated to pay back your loan when the time comes.

I'm a parent and I was unable to receive a Direct PLUS Loan for my child. What are my options?

If you attempted to obtain a Direct PLUS Loan for your undergraduate dependent student but could not do so, your child may be eligible to receive additional unsubsidized loans. If this occurs, have your child contact their school's financial aid office for further instructions on what to do in your situation.

Is there a deadline to apply for a Direct PLUS Loan?

There is no specific deadline to request a Direct Loan. There are, however, FAFSA deadlines that should be met. These deadlines vary by each school and state so you should check online to find your specific deadline for your state and school. Click here to see the current deadlines for the academic year.

How much can I borrow with a Direct PLUS Loan?

The maximum amount you can borrow is determined by your cost of attendance (each school's cost of attendance is different) minus any other financial aid you might also be receiving.

When will my Direct PLUS Loan funds be disbursed?

Typically, your funds are disbursed at least once per term during the academic year. This is true whether you are the borrower or if you are the parent taking the PLUS Loan out yourself. If your school does not use traditional measures (such as semesters or quarters) must pay you twice per academic year. First time borrowers that are also first-year students might have to wait a period of 30 days after their day of enrollment in the school before they will receive their first disbursement.

What is the interest on a Direct PLUS Loan?

Direct PLUS Loans have a fixed interest rate. Currently, that rate is set at 6.41%.

When am I required to pay back my Direct PLUS Loan?

Your Direct PLUS Loan will not enter repayment until the entire loan had been disbursed, or paid, to you. You are not required to make any monthly payments for as long as you are enrolled in school at least half-time, as well as, for 6 months after enrollment ends. If you are a parent borrower, you will need to contact your loan servicer in order to request a deferment while your child is in school at least half-time and for the additional 6 months after enrollment ends or drops below half-time attendance.

What are my Direct PLUS Loan repayment options?

You have several repayment plans that you will be able to choose from when it comes time to repay your loan. Some repayment plans, however, are only available to Direct PLUS Loan student borrowers so it's important to understand all of your options.

The following repayment plans are available to ALL PLUS Loans:

Standard Repayment Plan - Allows you to pay off your student loan debt in 10 years or less with a minimum monthly payment of $50. Your monthly payment will be a fixed amount based on your principle and interest.

Graduated Repayment Plan - Allows you to pay off your student loan debt in 10-30 years depending on the amount you owe. You will have a minimum monthly payment of $25 that will increase over time until your loan is paid completely. Your monthly payment will be determined by your debt amount.

Extended Repayment Plan - You must have at least $30,000 in federal student loan debt with a single lender to qualify for this repayment plan. If you qualify, this plan allows you to pay off your student loan debt in 25 years or less with a minimum monthly payment of $50. You have a choice of a fixed or graduated payment in this plan. You may also choose this option with consolidation and your payment period would change to 10-30 years.

The following repayment plans are available only to Direct PLUS Loans made to students:

Income-Based Repayment - This repayment plan is only available to student borrowers. You must have partial financial hardship to select this repayment plan. If you qualify, this plan allows you to pay off your student loan debt in 25 years or less. Your monthly payment is capped at 15% of your discretionary income*. These monthly payments may change due to income changes.

Pay As You Earn Repayment Plan - This repayment plan is only available to student borrowers. With this repayment plan, your monthly payments will change as your income changes. You will have a maximum monthly payment that is equivalent to 10% of your discretionary income*. You will have up to 20 years to make your monthly payments and pay your loan off in full.

Income-Contingent Repayment Plan - This repayment plan is only available to student borrowers. Using this repayment plan, you will have up to 25 years to pay your loan off in full. Your monthly payments are calculated and adjusted each year based on your adjusted gross income, family size, and the total amount of your Direct Loans.

Income-Sensitive Repayment Plan - Click here to get more information on FFEL (Direct) PLUS.

Who do I send my Direct PLUS Loan repayment to?

You will make your monthly payments (either the minimum or more if you're able) to the U.S. Department of Education. When it comes time to start making your monthly payments - after graduation, withdrawal, or decrease in attendance below half-time - you must complete an exit counseling session. This counseling is a crucial part of the borrowing process as it will provide you with information on your rights and responsibilities, as well as any deferment and repayment options you may have. Once you have completed your exit counseling, you are ready to begin making your monthly payments.