FAQ – Direct PLUS Loans

What is a Parent PLUS loan?

• Direct PLUS Loans are federal loans that graduate or professional students and parents of dependent undergraduate students can use to help pay for college or career school.

• A Direct PLUS Loan is commonly referred to as a

“Parent PLUS Loan” when made to a parent, and as a “Grad PLUS Loan” when made to a graduate or professional student.

What are the basic rules?

• Be the biological or adoptive parent (or in some cases, the stepparent) of a dependent undergraduate student enrolled at least half-time at an eligible school; • not have an adverse credit history (unless you meet certain additional requirements); • and meet the general eligibility requirements for federal student aid. (Your child must also meet these requirements.)

NOTE: Grandparents, unless they have legally adopted the dependent student, are not eligible to receive

Parent PLUS Loans, even if they have had primary responsibility for raising the student.

How much can you borrow?

• The maximum PLUS Loan amount you can borrow is the cost of attendance at the school your child will attend, minus any other financial assistance your child receives. (The cost of attendance is determined by the school.)

What is the current interest rate?

• For Direct PLUS Loans first disbursed between July 1, 2019 and July 1, 2020: 7.08% (This is a fixed interest rate for the life of the loan.)

Other than interest, is there a charge for Direct PLUS Loans?

• Yes, there is a loan fee on all Direct PLUS Loans. The loan fee is a percentage of the loan amount and is proportionately deducted from each loan disbursement. • The percentage varies depending on when the loan is first disbursed, for example: – Disbursed October 1, 2018 to October 1, 2019 Loan Fee: 4.248%

– Disbursed October 1, 2019 to October 1, 2020

Loan Fee: 4.236%

Do I have to make payments on my loan while my child is still in school?

• If you request a deferment, you will not need to make payments while your child is enrolled at least half-time and for an additional six months after your child graduates, leaves school, or drops below half-time enrollment. • If the school your child is attending requires you to submit your request for a Parent PLUS Loan at StudentLoans.gov, you will have the option of requesting a deferment as part of the loan request process. You can also contact your loan servicer to request a deferment. • If you do not request a deferment, you will be expected to begin making payments after the loan is fully disbursed (paid out). – During any period when you are not required to make payments, interest will accrue on your loan. – You may choose to pay the accrued interest or allow the interest to be capitalized (added to your loan principal balance) when you have to start making payments. Your loan servicer will notify you when your first payment is due.

Are repayment plans available for Parent PLUS Loans?

• Yes, there is a loan fee on all Direct PLUS Loans. The loan fee is a percentage of the loan amount and is proportionately deducted from each loan disbursement. • The percentage varies depending on when the loan is first disbursed, for example: • Parent PLUS borrowers are eligible for the following repayment plans: – Standard Repayment Plan – Graduated Repayment Plan – Extended Repayment Plan NOTE: Parent borrowers can become eligible for an additional repayment plan, the Income-Contingent Repayment (ICR) Plan, by consolidating their Parent PLUS Loans into a Direct Consolidation Loan.

– If you are seeking Public Service Loan Forgiveness (PSLF), you will need to repay your loans under an income-driven repayment plan. – The ICR Plan is the only income-driven repayment plan available to Parent PLUS borrowers. To repay your

Parent PLUS Loans under the ICR Plan, you must first consolidate the loans into a Direct Consolidation Loan.

As a Parent PLUS borrower, can you transfer responsibility for repaying the loan to your child?

• No, a Direct PLUS Loan made to a parent cannot be transferred to the child. You, the parent borrower, are legally responsible for repaying the loan.

Can you cancel the loan if you decide that you don’t need it or you need less than the amount offered?

• Yes. Before your loan money is disbursed, you may cancel all or part of your loan at any time by notifying your child’s school. • After your loan is disbursed, you may cancel all or part of the loan within certain time frames. Your promissory note and additional information you’ll receive from the school will explain the procedures and time frames for canceling your loan.

Can your Parent PLUS Loan ever be forgiven, canceled, or discharged?

• FORGIVEN: If you are seeking Public Service Loan

Forgiveness (PSLF), you will need to repay your loans under an income-driven repayment plan. – The Income-Contingent Repayment Plan is the only income-driven repayment plan available to Parent PLUS borrowers, and to repay your Parent PLUS Loans under the ICR Plan, you must first consolidate the loans into a Direct Consolidation Loan.

– However, you will not receive credit toward PSLF for any payments you made on your loans before they were consolidated. Only qualifying payments made on the new Direct Consolidation Loan will be counted toward the 120 payments required for

PSLF.

• CANCELED/DISCHARGED: As with loans made to students, a Parent PLUS Loan can be discharged if you die, if you (not the student on whose behalf you obtained the loan) become totally and permanently disabled, or if your loan is discharged in bankruptcy. – Your Parent PLUS Loan may also be discharged if the child for whom you borrowed dies. – In addition, all or a portion of a Parent PLUS Loan may be discharged in any of these circumstances: • The student for whom you borrowed could not complete his or her program because the school closed.

• Your eligibility to receive the loan was falsely certified by the school. • Your eligibility to receive the loan was falsely certified through identity theft. • The student withdrew from school but the school did not pay a refund of your loan money that it was required to pay under applicable laws and regulations.