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The Federal Family Education Loan Program (FFELP)
(available through June 30, 2010*)

For more information, contact:

TG Customer Assistance
(800) 845-6267
cust.assist@tgslc.org

PLUS Loans

PLUS Loans are low-interest loans designed for graduate and professional students (to finance their own education) and parents of dependent undergraduate students (to help finance the students' education). PLUS Loans are intended to supplement the Stafford Loan funds students can borrow. Borrowers can use PLUS Loans to help cover the cost of attendance.

TG provides a brief overview of PLUS Loans, including:

* The Health Care and Education Reconciliation Act of 2010 eliminates new lending under the FFELP such that all Stafford, PLUS, and Consolidation Loans first disbursed on or after July 1, 2010, must be made under the Federal Direct Loan Program (FDLP).

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Cost of attendance (COA)

A PLUS Loan is made from private lenders to eligible students (or eligible parents borrowing on behalf of their eligible dependent students) through the school. ED and the school determine the student's eligibility (and for parent borrowers, the parent's eligibility) from data that he or she provided on the Free Application for Federal Student Aid (FAFSA).

The school determines the amount of PLUS Loan funds that the student (or parent) may borrow, considering the COA and other estimated financial assistance. Each school determines the COA — an estimate of that student's educational expenses for the period in which the student is enrolled. A student's COA generally is the sum of the following:

  • Tuition and fees, including costs of rental or purchase of equipment (including equipment for instruction by telecommunications), materials, or supplies required of all students in the same course of study.
  • Room and board with adjustments for students who live at home with their parents, for students who live on campus, for students who live off-campus but not with their parents, and for students who attend less than half time.
  • Books, supplies, transportation, and miscellaneous personal expenses, including a reasonable amount, as determined by the school, for the documented rental or purchase of a personal computer that the student will use to study.
  • Loan fees, including the origination fee for a Direct Loan, or the origination fee and federal default fee for a FFELP loan. A school may also include the fees required for nonfederal student loans.
  • For a student with dependents, dependent care costs incurred during the student's class time, study time, field work, internships, and commuting time.
  • Allowance for the one-time direct costs of obtaining a first professional license or certificate for students who are enrolled in a program that requires such professional licensure or certification, if the cost is be incurred during (not after) a period of enrollment, even if the exam is after the end of the period.
  • For reasonable costs of study-abroad programs approved for credit by the student's home school.
  • For a disabled student, an allowance for reasonable expenses related to the student's disability, including special services, personal assistance, transportation, equipment, and supplies.
  • For reasonable costs to students engaged in a work experience through a cooperative education program.

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Who qualifies

FFELP PLUS Loans that are first disbursed before July 1, 2010, are available to graduate and professional students and the parents of dependent undergraduate students. A borrower must pass a credit check and be a U.S. citizen or eligible noncitizen to qualify. In the case of a parent borrower, the dependent student for whom the parent is borrowing must meet the eligibility requirements for federal student aid.

A borrower may not qualify if he or she has adverse credit, has defaulted on a federal student loan, owes an overpayment on other federal education aid, has been convicted of a drug-related offense while receiving federal student aid, or is incarcerated. A borrower also may be ineligible if, while receiving federal student aid, he or she has been convicted of or has pled nolo contendere or guilty to a crime involving fraud in obtaining Title IV funds and has not completed the repayment of such funds.

Full details on eligibility requirements are provided on the Federal PLUS Loan Application and Master Promissory Note.

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Credit check

Federal law requires the lender to perform a credit check before approving a PLUS Loan. Having no credit history is not considered adverse credit. However, the borrower will generally be unable to obtain a PLUS Loan if the borrower:

  • Is 90 days or more delinquent on repayment of any debt,
  • Has defaulted on any debt, or
  • Has been subject to: bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off of a Title IV debt during the five years preceding the date of the credit report.

The Higher Education Act of 1965, as amended by the Ensuring Continued Access to Student Loans Act of 2008 (ECASLA) allows a lender to determine that an applicant who is or has been delinquent for 180 days or fewer on mortgage loan payments or on medical bill payments between January 1, 2007, and December 31, 2009, and who does not otherwise have an adverse credit, may still qualify for a PLUS Loan.

If the borrower has an adverse credit history, the borrower may, at the lender's discretion, obtain a creditworthy endorser in order to obtain a PLUS Loan. The borrower should contact his or her lender for more information.

After a lender approves a PLUS Loan, the borrower receives a disclosure statement confirming the loan's guarantee and providing details and terms of the loan. This disclosure becomes part of the MPN, so the borrower is encouraged to keep this document until the loan is paid in full. The borrower should contact the lender if he or she has any questions.

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Interest rate and fees

  • The interest rate on a PLUS Loan made on or after July 1, 2006, and before July 1, 2010,1 is fixed at 8.5%.2
  • Federal law requires certain fees be charged for each loan made. Those fees consist of an origination fee and a federal default fee. The law specifies the maximum amount of each fee and authorizes both fees to be deducted from the loan amount. Fees charged to the borrower are deducted from the loan proceeds when the money is sent to the student's school. For PLUS Loans, the origination fee is 3% of the loan principal. The federal default fee is 1% of the loan principal.

1 The Health Care and Education Reconciliation Act of 2010 eliminates new lending under the FFELP such that all Stafford, PLUS, and Consolidation Loans first disbursed on or after July 1, 2010, must be made under the Federal Direct Loan Program (FDLP).

2 An eligible borrower may request, under the Servicemembers Civil Relief Act, an interest rate reduction to 6.0% on any FFELP loan made prior to the beginning of the borrower's military service or activation. The request must be received no later than 180 days after the date of the borrower's termination or release from military service. The borrower should contact his or her lender for more information.

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How to apply

A graduate or professional student must complete the Free Application for Federal Student Aid (FAFSA) and his or her school must determine the student's eligibility under the Federal Stafford Loan Program before the student may apply for a PLUS Loan. The student can complete the FAFSA online at www.fafsa.ed.gov. For assistance with the FAFSA process, call (800) 845-6267.

Generally, one MPN will cover all of the PLUS Loans borrowed for one student's higher education. However, there may be circumstances under which the borrower is required to complete more than one MPN. For instance, if a parent has more than one dependent in school at the same time, the parent must complete a separate MPN for each student. The school or lender will inform the borrower in these cases. The borrower may also request a new MPN any time he or she borrows.

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How the loan funds are delivered

Under the FFELP, private lenders (banks, credit unions, and other lending institutions) disburse PLUS Loan funds electronically directly to the school. Note: FFELP loans must be first disbursed before July 1, 2010.

In most cases, the school will deliver loan funds in two equal amounts — half at the beginning of the academic year and half midway through the academic year.

The school may deliver some or all of the loan money by crediting it to the student's account at the school or may give it to the borrower directly by check or other means. The lender will notify the borrower in writing each time the school delivers part of the borrower's loan funds.

If a graduate or professional student has not previously received a PLUS Loan or Federal Direct PLUS Loan, he or she must receive entrance counseling before the school can make the first disbursement of the student's loan.

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Loan amount

The maximum PLUS Loan amount is equal to the student's cost of attendance minus other estimated financial assistance (including Stafford loans borrowed by the student) that the student has been or will be awarded for the period of enrollment. The school determines the amount the borrower is eligible to borrow and informs the borrower of the eligible PLUS Loan amount through an award letter. The borrower accepts a loan amount equal to or less than this eligible amount. The school must certify the student's and borrower's (if different from the student) eligibility before the lender approves a PLUS Loan.

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Loan amount changes

The school may adjust the loan amount if the borrower's financial circumstances or the student's enrollment status changes. For example, if there is a change to the student's cost of attendance or the student receives additional financial aid funds, the school may be required to adjust the amount of the PLUS Loan.

The borrower may reduce the loan amount after guarantee by informing the school or the lender. The borrower can also reduce or decline a PLUS Loan, or even return all or part of the loan, up to 120 days after funds have been disbursed.

In most cases, the loan will be delivered in two equal amounts — half at the beginning of the school year, and half midway through the school year.

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Paying back the loan

For a parent borrower, the first payment of a PLUS Loan is generally due within 60 days of the final loan disbursement. However, a parent can defer payments on a PLUS Loan while enrolled in school on at least a half-time basis. In addition, for a PLUS Loan first disbursed on or after July 1, 2008, a parent, upon his or her request, can defer payments on a PLUS Loan:

  • For the six-month period after the parent drops below half time
  • While the student for whom the parent borrowed is enrolled at least half time and for the six-month period after the student drops below half time

For a graduate or professional student borrower, the student can defer payments on a Student PLUS Loan while enrolled in school on at least a half-time basis. In addition, the student can, for a Student PLUS Loan first disbursed on or after July 1, 2008, defer payments on a Student PLUS Loan for the first six months after he or she drops below half time.

If a borrower decides to have his or her payments temporarily postponed, the borrower must pay the interest on the loan or may allow it to be capitalized (added to the principal). In addition:

  • A $50-per-month minimum payment is required unless the borrower makes other arrangements with the lender.
  • The payment amount must be equal to at least the monthly interest due on the loan.
  • The standard repayment term is generally 10 years.
  • PLUS Loan borrowers may choose a repayment plan suited to their needs. Lenders can provide details.

For more information about paying back the loan, visit Repaying Your Student Loan on TG Online.

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