Direct PLUS Loan Program
PARENT ELIGIBILITY REQUIREMENTS FOR A DIRECT PLUS LOAN
The borrower must be the student's biological or adoptive parent or the student's stepparent, if the biological or adoptive parent has remarried at the time of application. The student must be a dependent student who is enrolled at least half-time at a school that participates in the Direct Loan Program.
ADDITIONAL REQUIREMENTS TO RECEIVE A DIRECT PLUS LOAN
Parent PLUS loan borrowers cannot have an adverse credit history (a credit check will be done). In addition, parents and their dependent child must be U.S. citizens or eligible noncitizens, must not be in default on any federal education loans or owe an overpayment on a federal education grant, and must meet other general eligibility requirements for the Federal Student Aid programs.
APPLYING FOR A PLUS LOAN AND THE MASTER PROMISSORY NOTE (MPN)
To take out a Direct Loan for the first time, the parent must complete a PLUS Application and master promissory note (MPN). The MPN is a legal document in which the parent promise’s to repay student loan(s) and any accrued interest and fees to the Department. It also explains the terms and conditions of your loan(s).
In most cases, once you've submitted the MPN and it's been accepted, you won't have to fill out a new MPN for future loans you receive to pay for the educational expenses of the same student. Unless your child's school does not allow more than one loan to be made under the same MPN, you can borrow additional Direct Loans on a single MPN for up to 10 years.
CREDIT CHECK & ENDORSER ALTERNATIVE
When applying for a Direct PLUS Loan, the Department will check credit history. To be eligible for a PLUS Loan, the borrower must not have an adverse credit history. If found to have an adverse credit history, one may still borrow a PLUS Loan if they obtain an endorser who does not have an adverse credit history.
LOAN LIMITS, INTEREST RATES, AND LOAN CHARGES
There are no set limits for Direct PLUS Loans, but the parent may not borrow more than the cost of the student’s education minus any other financial aid received, such as a Direct Subsidized or Unsubsidized Loan. ACM will determine the actual amount parents may borrow.
The interest rate for Direct PLUS Loans is a fixed rate of 7.9%. Interest is charged on Direct PLUS Loans during all periods, beginning on the date of the loan's first disbursement.
In addition to interest, parents pay a loan origination fee of 4%. This fee helps reduce the cost of making these low-interest loans. Dependent students whose parents have applied for but were unable to get a PLUS Loan are eligible to receive additional Direct Unsubsidized Loan funds.
HOW A LOAN IS DISBURSED (paid out)
Generally, the PLUS loan will cover a full academic year and ACM will make at least two disbursements to the parent.
In most cases ACM will disburse loan money by crediting it to the student’s account to pay tuition, fees, and other authorized charges. If the loan disbursement amount exceeds the student’s school charges, ACM will pay the remaining balance of the disbursement directly by check. ACM will notify in writing each time we disburse part of the loan amount and will provide information about how to cancel all or part of the disbursement if the borrow no longer should need the money.
REPAYMENT INFORMATION
Repayment usually begins on the date of the last disbursement. There is no grace period. However, parents can elect to delay or defer repayment on the Parent PLUS Loan for the period the student on whose behalf the loan was made is enrolled on at least a half-time basis and/or for the period that corresponds to the student’s 6-month grace period. (This is effective for loans first disbursed on or after July 1, 2008). Parent PLUS borrowers must separately request deferment for each period. Interest on the Parent PLUS Loan that accrues during the deferment period may be paid by the borrower or capitalized when the deferment period ends.
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Financial Aid Office - 301.784.5213
Date Last Updated:
June 1, 2010
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