Federal PLUS loans are government-sponsored, low-interest loans designed to help graduate/professional students (to finance their own education) and parents of dependent undergraduate students (to finance the students' education). The Federal PLUS Loan Program was created to supplement the loans students can borrow under the Federal Stafford Loan Program. Borrowers can use PLUS loans to help cover the cost of attendance including:

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

The maximum loan amount is based on the student's cost of attendance less any other financial aid awarded to the student.

PLUS advantages
PLUS loans have a number of advantages over traditional consumer loans, including:

• The interest rate charged on a PLUS loan is fixed at 8.5 percent.
• Borrowers can apply for a PLUS loan at any time.
• Many borrowers qualify for PLUS loans even if their income is too high for most other types of federal student aid.
• No collateral is necessary to qualify. The lender does, however, perform a credit check to determine creditworthiness; if the borrower does not qualify, he or she may obtain a creditworthy endorser.
• PLUS loans have a ten-year repayment period, so monthly payments are usually lower than personal bank loans, which generally require payment in three or four years.
• Many lenders offer discounted interest rates for on-time payment.
• There is no penalty for early repayment.

Interest rate and fees

• The interest rate on a PLUS loan made on or after July 1, 2006, is fixed at 8.5 percent.
• Federal law requires certain fees be charged for each loan made, including an origination fee and a federal default fee (previously called a guarantee 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.

How to apply
A graduate/professional student must complete the FAFSA and his or her eligibility must be determined under the Federal Stafford Loan Program before applying for a PLUS loan. Many schools require parent PLUS borrowers to complete the FAFSA. Both graduate/professional student borrowers and parent borrowers must complete a Federal PLUS Loan Application and Master Promissory Note (MPN) and submit it to the school or lender, as directed. The form may be completed online or obtained from a school or lender.

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, separate MPNs are required 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.

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 eligibility before the lender approves a PLUS loan.

Credit check
Federal law requires the lender to perform a credit check before approving a PLUS loan. Having no credit history is not viewed as bad 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.

* A lender may determine that extenuating circumstances exist and still consider an applicant with adverse credit eligible for a PLUS loan if, between January 1, 2007, and December 31, 2009, the prospective borrower is no more than 180 days delinquent on a primary residence mortgage or medical bill.

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.

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 a student changes his or her program of study or receives additional financial aid funds, the school may be required to reduce 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.

Who qualifies
Federal PLUS loans are available to graduate/professional students and the parents of dependent undergraduate students. A borrower must pass a credit check (see Credit Check above) 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 education 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. The 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 and Addendum to the Federal PLUS Loan Application and Master Promissory Note.

Paying back the loan
At the borrower's option the first payment of a PLUS loan is due

• within 60 days after the final loan disbursement is sent to the school; or
• for a graduate or professional student borrower, when he or she ceases to be enrolled in school at least half time (i.e., graduates, withdraws, or reduces coursework).
• for a parent borrower, the day after six months after his or her dependent student ceases to be enrolled at least 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.

Back to Top

PLUS MPN Forms

2008-2009 Interest Rates

Lender Fact Sheets

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