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The Federal Direct PLUS Loan

This is an education loan for parents of undergraduate students. The parent is the sole borrower, not the student. The Direct PLUS Loan has a fixed interest rate of 5.30%. There is also a 4.236% origination (upfront) fee that is deducted by the government from each loan disbursement. The origination fee may be included in the amount borrowed. To determine the gross amount to borrow, including the fee, divide the amount you need to cover your costs for the year by .9576.

 The student must file the FAFSA in order for the parent to borrow the PLUS Loan.


Application Instructions for New PLUS Loan Borrowers - To Apply, the Parent Borrower MUST: 

  1. Complete the Borrowing Intention Form (BIF) included with the financial aid offer* and return it to the Financial Aid Office (FAO) for processing. By waiting until the aid offer is received, you'll know the total amount you need to borrow to cover the annual expenses. Request the amount to be borrowed for the academic year. This will prevent having to complete two credit checks in one academic year. The funds are equally disbursed between the fall and spring semesters.  

    The application process for 2020-2021 described below will be available starting April 15, 2020. The credit history check will expire 90 days after completing the application.
  2. Complete the application and Master Promissory Note (MPN) online at studentaid.gov. Click LOG IN located in the top right (the parent borrower will need to use his/her FSA ID and password - the same one used to electronically sign the FAFSA), select the Apply for Aid tab and then apply for a Parent PLUS Loan. The requested amount listed on the BIF is the amount that will be certified by the FAO. 


Application Instructions for Current PLUS Loan Borrowers (including transfer students)

Do not apply prior to receiving your financial aid offer to be sure of the amount you need to borrow. In addition, the credit history check will expire 180 days after completing the application. The Financial Aid Office will not begin processing PLUS Loans until July 2020.

To apply, the parent borrower should:

  1. Complete the Borrowing Intention Form (BIF) included with the financial aid offer* and return it to the Financial Aid Office (FAO) for processing. By waiting until the aid offer is received, you'll know the total amount you need to borrow to cover the annual expenses. Request the amount to be borrowed for the academic year. This will prevent having to complete two credit checks in one academic year. The funds are equally disbursed between the fall and spring semesters.   
  2. Complete the application online at studentaid.gov. Click LOG IN located in the top right (the parent borrower will need to use his/her FSA ID and password - the same one used to electronically sign the FAFSA), select the Apply for Aid tab, and then apply for a Parent PLUS Loan. Only first-time borrowers need to complete the Master Promissory Note (MPN). The requested amount listed on the BIF is the amount that will be certified by the FAO.

*PLEASE NOTE: You must complete the aid application process before you will receive a financial aid offer. Please contact our office if you do not plan to file the FAFSA, finaid@lvc.edu.

 

Advantages of the Direct PLUS Loan include:

  • Qualifications are based solely on the parent's credit history and there are no debt-to-income ratio or employment verification requirements.  
  • Flexible repayment terms with up to 10 years to repay the loan. Parents may choose to defer payments until six months after the date the student ceases to be enrolled at least half time. Accruing interest may either be paid by the parent borrower monthly or quarterly, or be capitalized quarterly. To request a deferment, the borrower must wait until after the first disbursement of the loan (8/21/20 for fall 2020 and 1/9/21 for spring 2021) and then contact the loan servicer for instructions. To determine the loan servicer and for a centralized view of federal loans, the borrower should go to studentaid.gov and log in using his/her FSA ID and password.
  • Interest may be tax-deductible.  
  • No penalty for early repayment or payoff.
  • The student is eligible to borrow additional Unsubsidized Direct Loan funds if the PLUS Loan is denied (more information below). 
  • Provides built-in insurance for death and disability that applies to both the borrower and the student at no additional cost. 
  • You may opt to do a combination of both the Direct PLUS Loan and the HES payment plan.

If the parent is denied the Direct PLUS Loan, you (the student) are eligible to borrow additional funds through the Unsubsidized Direct Loan program ($4,000 per year for freshmen and sophomores and $5,000 per year for juniors and seniors). You must complete the BIF if you would like to borrow these funds. No additional Direct Loan funds will be processed without a completed BIF on file.

 

Federal Direct Graduate PLUS Loan  

No Subsidized Loan Eligibility for Graduate and Professional Students

The Federal Direct Graduate PLUS is a federal loan for graduate students enrolled at a minimum of 4.5 credits per semester. It offers excellent repayment terms and a fixed interest rate of 5.30%. There is also a 4.248% origination fee that is deducted by the government from each loan disbursement. The origination fee may be included in the amount borrowed. To determine the gross amount to borrow including the fee, divide the amount you need to cover your costs for the year by .9575.  

Students who choose to borrow through the Graduate PLUS Loan should do so after reviewing the financial aid offer, which is mailed in early July. By waiting until the aid offer is received, you'll know the total amount needed to cover annual expenses. The Financial Aid Office recommends applying for the full year rather than on a per-semester basis. By doing so, you will only have to complete the application (credit check) per academic year.

Interest on Graduate PLUS Loans begins accruing after the first disbursement. After the loan is fully disbursed, your federal loan servicer will automatically add an in-school deferment and a 6-month post-enrollment deferment. Interest is NOT capitalized until the end of the post-enrollment deferment period. 

To apply, please go to studentaid.gov and log in using your FSA ID and password (the same one you used to sign the FAFSA). Click the In School tab and then apply for a PLUS Loan for Graduate School. If you are a first-time graduate PLUS borrower, you must also complete the Master Promissory Note (MPN) and Entrance Counseling. The Financial Aid Office will be notified electronically. In addition to completing the steps at studentaid.gov, you must also complete the Borrowing Intention Form included with your financial aid offer and return it to the Financial Aid Office.