What is a Federal Direct PLUS Loan?
A federal Direct PLUS Loan (PLUS) is a loan a parent can borrow from the U.S. Department of Education to help fund the educational expenses of his/her dependent undergraduate student. This loan is in the parent’s name and he/she is solely responsible for repaying the loan. The student is not responsible for repaying this loan and it cannot be transferred to the student when he/she graduates.
- Parent borrower and student must not be in default on a federal loan or owe an overpayment of other federal student aid
- Parent borrower must be a biological or adoptive parent or an eligible step-parent
- Parent borrower and student must be U.S. citizens, nationals, or permanent residents
- Student must file a Free Application for Federal Student Aid (FAFSA)
- Student must maintain Satisfactory Academic Progress (SAP)
- Student must be enrolled at least half-time
- Parent borrowers must not have adverse credit history. For additional information on what is considered adverse credit, visit studentaid.gov
Interest and origination fees
Interest begins when the funds are disbursed to the student’s university account and continues until the loan is paid in full. The parent can choose to pay the interest or allow it to accrue (accumulate) and be capitalized (that is, added to the principal amount of the loan). Capitalizing the interest will increase the amount you have to repay.
|Disbursement date range||Interest rate|
|July 1, 2020 to July 1, 2021||5.30% fixed|
|July 1, 2021 to July 1, 2022||Not yet determined|
Additionally, loans disbursed from October 1, 2020 through October 1, 2021 carry an origination fee of 4.228%.
Loan repayment status
|Repayment||Repayment begins once the loan is fully disbursed (entire amount of the loan has been applied to the student’s university account).|
|Deferment||Deferment is a temporary suspension of making payments. For information about deferring payment of a Parent Plus Loan while a student is enrolled in school, the parent borrower can contact the loan servicer. The Loan servicer is assigned when the loan is disbursed.|
Direct PLUS application and other required documents
- Use the Department of Education’s online application to apply for a federal Direct parent PLUS loan at studentaid.gov
- Parent must log in using their own federal student aid id (FSA ID) and password
- The application asks what academic year the parent wants to apply for and what semesters they want to borrow the loan for. In general, MU’s regular academic year begins in the fall semester and ends with spring semester. Summer is tacked on to the end of the academic year. Fall semester (August – December) Spring Semester (January – May) Summer Semester (June – July)
- Complete a Master Promissory Note
- Complete an annual Student Loan Acknowledgement
- Credit Counseling is only required if the parent was initially denied a PLUS loan and obtained an endorser or is approved based on an appeal
Disbursement of funds
Funds are applied in one or two installments depending on the time period the loan is requested for.
- Fall loan – one installment
- Spring loan – one installment
- Fall and spring loan – two installments (one for each semester)
- Summer loan – one installment
Funds are first credited to the student’s MU account to pay any balance due for tuition, fees, housing, meals and other school charges. Extra funds are forwarded to the parent borrower unless he/she has authorized the refund to be released to the student. A parent indicates this on the Direct parent PLUS application.
Additional information about PLUS Loans
For additional information about Direct Parent PLUS Loans, visit studentaid.gov.