Federal PLUS (Parent Loan for Undergraduate Students) Loan

Terms

The Federal PLUS Loan is a long-term, unsubsidized, non-need-based loan available for parent(s) to borrow on behalf of an undergraduate student. The variable annual interest rate is set every July 1, with a cap of 9%. It is based on the 91-day T-Bill + 3.1 percent. During the 2005-2006 academic year, the PLUS Loan interest rate is 6.10 percent.

Repayment

Repayment of principal and interest begins within 60 days after the second disbursement, and a 10-year repayment is generally offered. This lengthy repayment period is what makes the PLUS Loan attractive to some families. At current interest rates, a $10,000 loan can be repaid over ten years for about $110 to $130 per month. Some lenders also offer a “forbearance” to the parent borrower while the student is enrolled in school. In this situation, the parent will not be required to enter repayment until the student leaves school. Interest will accrue during this period and will be capitalized before repayment begins.

Source

The PLUS Loan is available through private lenders. If your parent decides to borrow a PLUS Loan, we will offer some guidance about how to choose a lender.

Eligibility

Any parent (custodial or non-custodial) of a dependent, undergraduate student who has remaining cost to meet may apply for a Federal PLUS Loan. A credit check for the borrower is required prior to approval. While debt-to-income ratio is generally not a consideration in eligibility, an adverse credit history may prevent a parent from being approved for a PLUS Loan. (If the parent is denied a PLUS Loan the student may be eligible to borrow additional funds from the unsubsidized Stafford Loan; contact the Financial Aid Office for details.)

How To Apply

In order to be considered for a Federal PLUS Loan, the student must complete the Free Application for Federal Student Aid (FAFSA). After this has been processed, the Financial Aid Office will provide guidance about eligibility for the loan as well as how to select a lender and apply for the loan.

Available funds

Each year a parent may borrow up to the cost of attendance less any other financial aid received.

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