Parent Eligibility Requirements for a Direct PLUS Loan
In order to borrow a Direct PLUS Loan, you must be the student's biological or adoptive parent or the student's stepparent, if the biological or adoptive parent has remarried at the time of application. Your child must be a dependent student for financial aid purposes and must be enrolled at least half-time status.
Additional Requirements to Receive a Direct PLUS Loan
Direct PLUS loan borrowers cannot have an adverse credit history (a credit check is required). In addition, parents and their dependent child must be U.S. citizens or eligible noncitizens, must not be in default on any federal education loans or owe an overpayment on a federal education grant, and must meet other general eligibility requirements for the Federal Student Aid programs.
How to apply for a Direct PLUS Loan
To apply for a Direct PLUS Loan, you must complete a Direct PLUS Loan Application/Master Promissory Note via the studentaid.gov website. The MPN is a legal document in which you promise to repay your loan (s) and any accrued interest and fees to the USDE. It also explains the terms and conditions of your loan(s).
Loan Limits for a Direct PLUS Loan
Although there are no set limits for a Direct PLUS Loan, you may not borrow more than the estimated cost of your child's education, which is determined by the school, minus any other financial aid received by the student. Therefore, the school will determine the actual amount that you may borrow in a Direct PLUS Loan.
Direct PLUS Loan Credit Check
When you apply for a Direct PLUS loan, the USDE will check your credit history. To be eligible, the borrowers must not have an adverse credit history. If you are found to have an adverse credit history, you may still borrow a PLUS Loan if you obtain an endorser who does not have an adverse credit history. An endorser is someone who agrees to repay the Direct PLUS Loan if you do not repay it. If the parent is denied the PLUS Loan and chooses not to use or is unable to obtain an endorser, then the student is eligible for an additional Direct Unsubsidized Loan. First and second year students are eligible for an additional $4000. Third and fourth year students are eligible for an additional $5000.
Disbursement of a Direct PLUS Loan
Generally, your Direct PLUS loan will be processed for a full academic year and there will be two disbursements to the student's account at the beginning of each semester. If the loan disbursement amount exceeds the student's direct educational expenses, the school will forward the remaining balance of the disbursement to either the borrower or student as indicated by the borrower during the application process. Please note that all student loans are to be used for educational purposes only. These include direct school charges such as tuition, room and board, fees, and indirect expenses such as books, supplies, equipment, child care expense and transportation.
Repayment of your Direct PLUS Loan
Unlike the student Direct Loan, there is no grace period for the Direct PLUS Loan. The repayment period begins sixty (60) days after the school makes the last disbursement of the loan. You can, however, defer repayment of a Direct PLUS Loan while the student for whom you obtained the loan is enrolled at least half-time (six credits or more) and for an additional six months after the student graduates or drops below half-time enrollment.