Loans: Federal Direct Parent PLUS Loan
Beginning fall 2008, IU will be a participant in the William D. Ford Federal Direct Loan program.
The Federal Direct Parent PLUS Loan may be borrowed by a parent on behalf of their dependent, undergraduate student. The Federal Direct Parent PLUS Loan requires a special application and requires credit approval. The borrower must also sign a Master Promissory Note in order to receive the Federal Direct Parent PLUS Loan.
Please contact our office for detailed information about the Federal PLUS Loan for the summer.
2008-2009 ACADEMIC YEAR
Borrower Benefits
- Federal Direct Loans come through the U.S. Department of Education using funds obtained from the U.S. Treasury. This process ensures that the borrower will have a reliable and predictable source of funding.
- Interest rate reduction of .25 percent for borrowers who make their payments using the Electronic Debit Account (EDA) program.
Details
- Interest rates:
- For loans disbursed before July 1, 2006: variable interest rate currently at 8.02%; variable interest rate is subject to change each July 1 (but not to exceed 9%).
- For loans disbursed on or after July 1, 2006: fixed interest rate of 7.9%.
- Origination fee of 4% assessed by the Direct Loan servicer.
- The loan is unsubsidized, meaning that interest begins accruing immediately upon the loan’s first disbursement.
- Eligibility:
- The borrower must complete and submit the Federal Direct Parent PLUS Loan Request available at our office and on our website (under Forms > Applications) which acts as the loan application.
- The borrower must be the biological or adoptive parent, or step-parent, of the student for whom the Federal Direct Parent PLUS Loan is being borrowed.
- The borrower must be a U.S. citizen or U.S. national, or be a permanent resident of the United States.
- The borrower must meet specified credit requirements. *
- The student must be enrolled at least half time and meet all regular eligibility requirements (including satisfactory academic progress).
- If the loan application is denied due to credit history, the borrower may still receive a Federal Direct Parent PLUS Loan if able to obtain an endorser who can gain approval based on credit history. An endorser is someone who agrees to repay the loan if the borrower does not repay it.
- A signed Master Promissory Note must be on file with the Direct Loan servicer for Federal Parent PLUS Loan funds to be disbursed.
- Federal Parent PLUS Loans cannot be processed after the final day of the term for which the student was enrolled. Parents are strongly encouraged to complete the application for this type of loan well in advance of the end of the term to ensure adequate processing time. Students must also clear any holds that they may have on their financial aid accounts before processing can occur.
- Repayment begins within 60 days after the loan is fully disbursed. Deferral of repayment until six months after the student graduates or drops below half-time enrollment may be available.
- A Federal Parent PLUS Loan may be processed without a Free Application for Federal Student Aid (FAFSA) on file, if the student never plans to file. If, however, a student files a FAFSA (or indicates he/she plans to file), we will wait to certify the Federal Parent PLUS Loan until the student‘s federal and state financial aid eligibility is reviewed.
- The Federal Direct Parent PLUS Loan may be processed for up to the amount of the Cost of Attendance, minus any aid the student is already receiving.
* If the borrower is denied the Federal Direct Parent PLUS Loan, the student may be eligible to receive additional funding in the form of a Federal Direct Stafford Unsubsidized Loan by completing and submitting the Dependent Student Request for Additional Federal Stafford Unsubsidized Loan form available at our office and on our website (under Forms > Applications).