Federal Parent Loan (PLUS)

Federal Direct Parent Loan (PLUS)

A Federal Direct Parent Loan (PLUS) is a fixed interest rate installment loan to help parents with good credit, pay for their dependent child's education. A parent may borrow up to the student's costs of education minus any financial aid the student receives during the enrollment period. This loan is in one parent's name and the parent is responsible for repayment on this loan.

Federal Direct Loan Program

Direct Loans are low interest loans for students and parents to help pay for the cost of a student's education after high school.  The lender is the U.S. Department of Education rather than a bank or other financial institution. 

Eligible PLUS Loan Borrower

• The parent borrower must be the student's biological or adoptive parent.  In some cases, the student's stepparent may be eligible.
• The student must be a dependent student who is enrolled at least half-time.
• The parent borrower must not have an adverse credit history.  See credit criteria below.
• The student and parent must be U.S. citizens or eligible non-citizens, 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.

Loan Disbursement

Generally, loan money will be disbursed to the student's account in two installments, one at the beginning and one at the midpoint of the dependent student's enrollment period. For parent's of students in the Graduate and Professional Studies program, the PLUS loan will be disbursed before each billing period, depending on a students enrollment.

Fees

There is a 4% origination fee.  When calculating your out-of-pocket, add on the 4% fee to what you will need to borrow as that will be deducted from each Federal Direct PLUS loan disbursement.

Repayment

• First payment of principal and interest on the Federal Direct PLUS loan will be due within 60 days of the final disbursement of the current academic year.
• Interest begins to accumulate when the first disbursement is made.
• The standard repayment plan is 10 years.
• Payments may also be postponed while the student is enrolled (forbearance), up to six months after the dependent student on whose behalf the parent borrowed ceases to be enrolled on at least a half-time basis.
• A Federal Direct PLUS Loan made to the parent cannot be transferred to the student.  The parent is responsible for repaying the PLUS Loan.
• Contact Direct Loan Servicing Center at 800-848-0979 for any repayment or forbearance questions.

Interest Rate

• The interest rate for Federal Direct Parent PLUS Loans first disbursed on or after July 1, 2006 is fixed at 7.9%.

Prior Federal Loans and Financial Aid History 

Federal loans will be submitted to the National Student Loan Data System (NSLDS), and will be accessible by guaranty agencies, lenders, and schools determined to be authorized users of the NSLDS system. 

If you currently have a federal student loan and would like to check the interest rate, servicer information, and other financial aid history, go to the National Student Loan Data System (NSLDS) at www.nslds.ed.gov. and use your federal PIN (FAFSA pin) to access your information.

How to apply for a Federal Direct Parent Loan (PLUS)

New Borrowers

1. Complete the Buena Vista University Federal Direct Parent PLUS Loan Request Form and submit it to: Office of Financial Assistance, 610 W 4th, Storm Lake, IA 50588 or fax to 712-749-1451.
2. After the Office of Financial Assistance receives the Federal Direct Parent PLUS Loan Request Form, we will send the PLUS loan application electronically to the Direct Loan Servicing Center for a credit check review.
3. Parents borrowing the Federal Direct PLUS loan for the first time must also complete the Federal Direct PLUS loan Master Promissory Note (MPN).  To complete the PLUS MPN go to StudentLoans.gov. 
4. Electronically sign the Master Promissory Note (MPN) using your Department of Education PIN (FAFSA PIN).
5. Print the MPN for your records.

Returning Borrowers

1. Complete the Buena Vista University Federal Direct Parent PLUS Loan Request Form and submit it to: Office of Financial Assistance, 610 W 4th, Storm Lake, IA 50588 or fax to 712-749-1451.
2. Parents who have borrowed previously through the Federal Direct PLUS Loan program will not need to sign a new Federal Direct PLUS Master Promissory Note.  NOTE:  A Federal Direct PLUS Loan MPN is valid for 10 years.
3. If a parent was denied a Federal Direct PLUS Loan in the past and the student then borrowed the additional Unsubsidized Stafford Loan, you are still required to apply for the Federal Direct PLUS Loan each year.

PLUS Denied

Credit Criteria

Credit  approval is based on federally mandated criteria, not a credit score.  In order to qualify, you must not have any of the following items on your credit report:

• Any current delinquency of 90 days or more

• Any of the following items within the preceding five years of the date of the credit report:  Default, Bankruptcy, Discharge, Foreclosure, Repossession, Tax Lien, Wage Garnishment, Write-off of a Title IV Debt, Open Collection

Recent changes in the law that governs the terms and conditions of PLUS loans establish a specific extenuating circumstance for certain PLUS loan applicants who would otherwise be considered to have an adverse credit history.  Specifically, a PLUS loan applicant may qualify for a PLUS loan based on extenuating circumstances if the applicant:

• Has been or is delinquent for 180 days or less on mortgage loan payments, or on medical bill payments for the applicant or the applicant's family, and

• Does not otherwise have an adverse credit history as determined in accordance with the federal regulations that apply to PLUS loan applicants.

If the Federal Direct Parent PLUS Loan is Denied

• Processing of the Federal Direct Parent PLUS Loan stops
• The Direct Loan Servicing Center will notify the parent and explain why the review of his/her credit history was denied.
• The parent may contact the Direct Loan Servicing Center (800-848-0979) to either appeal the decision or investigate the option of securing an endorser.
• If the parent has indicated on the Federal Direct Parent PLUS Loan Request Form to allow the student to receive additional Federal Direct Unsubsidized Loan; first year/sophomore up to $4000; junior/senior up to $5000, one will be processed as part of the student's financial aid award.