PLUS Loan

If you do not qualify for federal financial aid or if the aid that you have received from both your school and other sources isn’t enough to completely cover your college expenses, the federal PLUS loan may be the answer to your need.

A PLUS loan is a “Parent Loan for Undergraduate Students” sponsored by the federal government. A PLUS Loan can cover the entire cost of undergraduate education (less student financial aid) for a dependent child. Those expenses include:

• Tuition
• Supplies
• Room and board
• Living expenses
• Books

PLUS loans are available directly from the government through the Direct PLUS loan program or through a participating independent lender, i.e., the FFEL (Federal Family Education Loan) program. For a Direct PLUS Loan, you must complete a Direct PLUS Loan application and promissory note, contained in a single form that is obtained from your school’s financial aid office. For a FFEL PLUS Loan, you must complete and submit a PLUS Loan application, available from your school, lender, or your state guaranty agency. After the school completes its portion of the application, the application is sent to your selected lending organization for evaluation. A family can get either loan, but not both, for the same student during the same enrollment period.

The primary functional difference between the Direct PLUS loan and the FFEL Plus loan is the array of repayment mechanisms available. (See PLUS Loan Repayment.)

The PLUS loan is not need-based. Instead, granting of the loan is based on credit worthiness. (See PLUS Loan Credit Requirements.) No collateral is required to obtain a PLUS loan.

The interest rate, though variable (adjusted annually on July 1), does not exceed 9 percent. For the 2005-2006 educational year, the interest rate for loans made on or after July 1, 1998 was 6.1 percent. Your family will be notified of interest rate changes throughout the life of the loan. Interest is charged on the loan from the date of the first disbursement until the loan is paid.