Federal Direct PLUS

The Federal Direct PLUS loan is an optional federal loan program for parent(s) who wish to access additional resources beyond what a student is eligible to receive.  This credit-based, parent loan option may cover up to the total Cost of Attendance (COA) minus student aid.The interest rate for a Federal Direct PLUS is fixed for 2014-2015 at 7.21%.  Since the Federal Direct PLUS  is a federal loan, there are generally more benefits available in applying for this type of loan versus a student alternative loan.

Each Federal Direct PLUS Loan disbursed is charged a loan fee on the principal amount borrowed. Any Direct PLUS Loan that has a first time disbursement before October 1, 2014,  will be charged a 4.288% origination fee.  Loans disbursed on or after October 1, 2014, are subject to a 4.292% origination fee. The fee is applied before you receive any loan money.  Fees may change each year based on federal mandates.

Apply for a Direct PLUS Loan by completing BOTH steps below:

Step 1: Parent Loan Request Form:  Be sure to complete all boxes of this online form before clicking the “Submit” button located at the bottom of the Request form.  All borrowers, new and prior-year, must complete a new Parent Loan Request Form each time they wish to borrow.

Step 2: Master Promissory Note (MPN): This should be done in the parent’s name and must be completed online by logging into the StudentLoans.gov website (see top left-hand side of page) using the Federal Personal Identification Number (PIN) from the FAFSA. Follow the link to ‘Complete Master Promissory Note‘. DO NOT use the link that says ‘Request a Direct PLUS Loan’ since using this link does not allow for the necessary PSU steps to process this loan.  Parents who had a Federal Direct PLUS loan in 2014-2015 do not need to complete a new MPN.  Parents that either required an endorser on their MPN or were denied a Federal Direct Loan PLUS loan in 2014-2015 will need to complete both the MPN and Request Form for 2015-2016.

SPECIAL NOTE:  Due to required federal updates, PSU will only begin sending 2015-2016 Direct Loan PLUS certification requests to the Department of Education late June/early July.  If you have any questions or concerns before that, please contact us.

Important notes:

  • In order to receive a Federal Direct PLUS Loan, you must complete a FAFSA.
  • The PARENT is the only signer on this loan and is solely responsible for repayment.
  • An acceptable credit check, per government guidelines, is required to access this loan program.
  • If you do not already have a PIN or have lost your PIN information,  you can go to www.pin.ed.gov to apply or request a duplicate.
  • Your MPN is not considered complete until you reach the screen with the following message: Thank you for submitting the MPN.
  • You may view/download the PDF version of your completed MPN.
  • If your student intends to either reduce or decline the Federal Work Study award to increase the parent’s eligibility for the Federal Direct PLUS Loan, please submit a request at least a day prior to applying for the loan.
  • The PLUS application process takes approximately one week to complete once Plymouth State University receives confirmation that the two steps listed above have been electronically submitted.
Borrowers whose Direct PLUS Loan credit checks are processed on or after March 29, 2015 and who are denied based on an adverse credit history can secure an approved endorser.  The endorser is subject to the same credit check as the applicant. Or the apparent can appeal the denial on extenuating circumstances. In both cases, the parent will be REQUIRED to complete PLUS Counseling at www.studentloans.gov. PLUS Counseling must be completed before disbursement of the Direct PLUS Loan funds.

What if my parent is ineligible to borrow a PLUS loan?

If parents are determined ineligible to borrow through the Federal Direct PLUS Loan, PSU will automatically increase the student’s Unsubsidized Federal Direct Loan eligibility. First and second year students are eligible for up to an additional $4,000 per year, while third through fifth year students are eligible for up to an additional $5,000 per year.  If the PLUS is subsequently approved, the additional unsubsidized student loan will be adjusted.

If a student does not wish to accept all or part of their Unsubsidized Direct Loan, they should contact the PSU Financial Aid Team.

Starting July 2011, as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, consumers who are rejected for student loans, automobile loans or credit card applications are entitled to receive a free copy of their credit score and an explanation of why they were turned down. The reasons can range from late payments to maxing out credit cards. Creditors are also supposed to explain where the score, known as FICO, ranks nationally, and outline the factors that brought the score down. (Chicago Sun-Times)

Parents who are determined ineligible for the Parent PLUS loan should contact Applicant Services at 800-557-7394 for an explanation of why they were declined.

When does repayment begin?

Repayment of the Direct PLUS Loan begins 60 days after the loan is fully disbursed for an academic year. However, if you’re a parent PLUS borrower who is also a student, you can defer repayment while you’re enrolled in school at least half time and (for Direct PLUS Loans first disbursed on or after July 1, 2008) for an additional 6 months after you graduate or drop below half-time enrollment.

As a parent PLUS loan borrower, you can defer repayment of Direct PLUS Loans while the student for whom you obtained the loan is enrolled at least half time, and for an additional 6 months after the student graduates or drops below half-time enrollment.  You must separately request each deferment period from your loan servicer.  To determine your servicer(s), please access the National Student Loan Data System (NSLDS) with your information.

Interest will continue to accrue on this loan during the deferment period; therefore, we recommend that you make your interest payments during this deferment period if at all possible.

Generally, you’ll have from 10 to 25 years to repay your loan, depending on the repayment plan that you choose. The loan servicer will notify you of the date your first payment is due. If you do not choose a repayment plan, you will be placed on the standard ten year repayment plan, with fixed monthly payments for up to 10 years. Most Direct Loan borrowers choose to stay with the standard repayment plan, but there are other options for borrowers who may need more time to repay or who need to make lower payments at the beginning of the repayment period.

You can change repayment plans at any time by contacting your loan servicer.

How much will monthly payments be?

Many online loan repayment calculators can be found online, including the ones at FINAID.org and the Department of Education.  You can use these to estimate how much you will need to repay.  Please note, the longer your loan is in repayment, the more interest you will pay. Calculations are estimates. Values may not reflect the actual amount computed by the Direct Loan Servicing Center.

Are there any benefits for military members?

If a parent qualifies under the Service Members Civil Relief Act, the interest rate on loans obtained before entering military service may be capped at 6% during the parent’s military service. Parents must contact their loan servicer to request this benefit.

In addition, borrowers are not charged interest (for a period of no more than 60 months) on Direct Loans first disbursed on or after October 1, 2008, while a borrower is serving on active duty or performing qualifying National Guard duty during a war or other military operation or other emergency, and serving in an area of hostilities qualifying for special pay.


The Federal Student AidOmbudsman of the Department of Education helps resolve disputes and solve other problems with federal student loans.  Please do not hesitate to contact them at 877-557-2575 should you feel they can be of assistance.

April 7th, 2014 by Eric

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