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PLUS MPN Forms

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PLUS Loans

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.

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 below) 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.

Interest rate and fees

The interest rate on a PLUS loan made on or after July 1, 2006, is fixed at 8.5%*.
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. The federal default fee is 1% of the loan.

* 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.

How to apply

A graduate/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 applying 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.

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.

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.

* 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/was no more than 180 days delinquent on a primary residence mortgage or medical bill.

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.

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.

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 6-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 6-month period after the student drops below half time

For a graduate or professional student borrower, the student can defer payments on a Grad PLUS loan while enrolled in school on at least a half-time basis. In addition, the student can, for a Grad PLUS loan first disbursed on or after July 1, 2008, defer payments on a Grad PLUS loan for the first 6 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.