Federal Direct Parent PLUS Loan
The William D. Ford Federal Direct Parent PLUS Loan program is available to parents (legal or adoptive, or stepparent, if their information is required on the FAFSA®) of dependent undergraduate students enrolled at least half time at Linfield College. A loan is money that must be repaid with interest. The lender is the U.S. Department of Education (ED) and parents borrow from ED and repay ED. Parents with no adverse credit may borrow Federal Direct Parent PLUS Loan funds to pay the education expenses of their child. Eligible parents are required to pass a credit check, which means the parent does not have adverse credit history, however in some cases parents with adverse credit history may be able to qualify by appealing the decision or obtaining an endorser. The student must file a Free Application for Federal Student Aid (FAFSA®). 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.
More information on the general eligibility requirements for the Federal Student Aid programs can be found at Funding Education Beyond High School: The Guide to Federal Student Aid.
Process for applying and receiving a Federal Direct Parent PLUS Loan at Linfield:
- Complete and submit the Free Application for Federal Student Aid (FAFSA®) for dependent student at www.fafsa.gov, list Linfield's federal school code 003198.
- Complete the 2018-2019 Federal Direct Parent PLUS Loan Request Form and submit to the Office of Financial Aid.
- The maximum annual Parent PLUS Loan a parent can request is calculated by subtracting all financial aid from the cost of attendance. To learn about the maximum amount that can be borrowed on behalf of the dependent student, contact the Office of Financial Aid at firstname.lastname@example.org or call: 503.883.2225.
- Upon receipt of the Federal Direct Parent PLUS Loan Request Form the Office of Financial Aid will complete the credit check process on the federal website. The credit decision is good for 180 days.
Outcomes of credit decision:
- If approved, the parent borrower will need to complete a Federal Direct Parent PLUS Loan Master Promissory Note (MPN) online under the Parent Borrowers tab at www.studentloans.gov. Once the MPN is e-signed, the Office of Financial Aid will prepare the loan funds for disbursement to the student’s account.
- If the credit check result is declined due to an adverse credit history, the parent has several options. Parents may appeal the credit decision by calling toll free at 800.557.7394, obtain an endorser/co-borrower, do nothing, or notify the Office of Financial Aid that these options will not be pursued and ask about the dependent student’s eligible to borrow the additional Unsubsidized Federal Direct Stafford Loan. In situations where a Parent PLUS loan borrower’s credit decision is declined, and an endorser or approval to overturn the credit decision obtained, PLUS Loan Counseling must also be completed in addition to the PLUS MPN.
The parent will be sent a loan disclosure statement from the Federal Servicer, which includes the terms and conditions of the loan borrowed.
A “variable-fixed” interest rate is assessed on the loan from the date the first disbursement is made until the loan is paid in full.
- The fixed interest rate is 7.00% for loans disbursed between July 1, 2017 and before July 1, 2018.
- The fixed interest rate is 7.60% for loans disbursed between July 1, 2018 and before July 1, 2019.
On August 9, 2013 President Obama signed into a law a market-based student loan bill where the loan interest rate is “variable-fixed” rate based upon the 10-year Treasury bill plus a 4.6% add on. Every year on July 1, the variable-fixed rate is set. The new rate is set with each new loan. The interest rate cap is 10.5% for Federal Direct PLUS loans.
Federal Direct Parent PLUS Loans are subject to a 4%* loan fee that will be subtracted from the requested loan amount at the time of disbursement. Loan fees are set by the federal government and the amounts vary depending on when the loan was disbursed. Loan fee calculations that result in more than two decimal points must be truncated (not rounded) to two decimal points (cents).
The Budget Control Act of 2011 (the sequester law) remains in effect, and sequester-required changes to the loan fees are as follows:
*Beginning October 1, 2016 for any loans first disbursed on or after October 1, 2016 and before October 1, 2017 the Loan Fee is 4.276%
*Beginning October 1, 2017 for any loans first disbursed on or after October 1, 2017 and before October 1, 2018 the Loan Fee is 4.264%
Repayment will begin 45-60 days after the final loan disbursement for the academic year. There is no grace period for Parent PLUS loans. Interest begins to accrue at the time the first disbursement is made. Parents have two repayment options while the student is enrolled at least half time in a four-year undergraduate degree program:
- Full principle and interest payments for 10 years
- Deferred payment during the student’s four year undergraduate program. Interest will accrue during this period. To make arrangements for in-school deferment contact the Direct Loan Servicer, or visit www.studentloans.gov.
Parents will be automatically placed in the Standard Repayment Plan upon beginning repayment, unless a different plan is requested per eligibility determine with the Direct Loan Servicer. Contact the Direct Loan Servicer to choose a different plan, discuss trouble with repayment, or consolidation. With the Standard Repayment Plan, parents will pay a fixed amount each month until the loans are paid in full. The monthly payments will be at least $50, and borrowers will have up to 10 years to repay their loans. It is important to repay the Parent PLUS Loans, failure to repay results in default and has serious consequences. Parents can track their loan history by accessing the National Student Loan Data System to see all federal aid received from all schools attended, as a student and as a parent borrower.
The parent’s monthly payment under the Standard Repayment Plan may be higher than it would be under other plans because loans will be repaid in the shortest time. For that reason parents may pay the least amount of interest.
To calculate estimated loan payments, use the Department of Education's Repayment Estimator calculator.
Calculator results: Using the repayment calculator, with an interest rate of 6.41% and total Stafford debt of $32,000 an example repayment schedule would be:
|Repayment Plan||Terms (in months)||Initial Monthly Payments||Total Payments (Interest+Principal)|
(see Note 1.)
Note 1: This is an estimated monthly repayment amount for the first two years of the term and total loan payment. The monthly repayment amount will generally increase every two years, based on the gradation factor in the graduated repayment rules.
Frequently Asked Questions
Who is considered a parent? To borrow a Federal Direct Parent PLUS loan for a student, the parent must be the student’s biological or adoptive mother or father. A stepparent is eligible to borrow a Federal Direct Parent PLUS Loan if their income and assets are taken into account when calculating the dependent student’s Expected Family Contribution (EFC), because their information was required on the student's FAFSA®. A Federal Direct Parent PLUS Loan Request Form and a separate Federal Direct PLUS Loan MPN are required for each dependent student a parent is borrowing for, or if both parents want to borrow individually on behalf of the same student. Legal guardians and grandparents are not eligible to apply for the Parent PLUS loan.
What is considered adverse credit history? An applicant has an adverse credit history if on the date of the credit report, the applicant is 90 or more days delinquent on any debt over the $2,085 debt threshold (subject to annual review), or has been the subject of a default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off of a debt under title IV of the Act during the five years preceding the date of the credit report.
Can I borrow more Federal Direct Parent PLUS Loan funds to cover January Term for my dependent student? After the student has registered for January Term, an additional Federal Direct Parent PLUS Loan Request Form may be submitted to the Office of Financial Aid in order to process this additional loan. The Office of Financial Aid will increase the student’s cost of attendance based on the number of credits the student is enrolled in for January term, and subtract all financial aid to determine the additional amount the parent may be eligible to borrow. The loan funds will be prepared for spring semester, and disbursements will occur at the beginning of Spring Semester. Contact the Linfield Student Accounts Office at 503.413.7887 to discuss payment arrangements.
When do I apply for this loan? Submit the Federal Direct Parent PLUS Loan Request Form to the Office of Financial Aid at any time during the academic year, until the student ceases attendance. Federal Direct Parent PLUS Loan requests must be processed before the last date of the student’s enrollment for this period.
How do I track my loans? Access the U.S Department of Education’s National Student Loan Data System (NSLDS) under "Financial Aid Review" to retrieve loan information. This website allows parents to see all federal aid received from all schools attended, as a student and as a parent borrower.
How do I determine my Direct Loan Servicer? Request information about the Direct Loan Servicer by calling 1-800-433-3243 or retrieve loan information online through the U.S Department of Education’s National Student Loan Data System (NSLDS) under Financial Aid Review. Notifications from the U.S. Department of Education, such as disclosure statements, should list the Direct Loan Servicer contact information. A list of Federal Servicers and their contact information is available on www.studentloans.gov.
Terms and Conditions
Terms and conditions of the Federal Direct Parent PLUS Loan are located on the Master Promissory Note, which parents are encouraged to read and sign online at www.studentloans.gov. Preview a read-only version of the Federal Direct Parent PLUS Loan Master Promissory Note (MPN), which includes borrower rights and responsibilities as well as the terms and conditions.
Default (failing to repay a loan) is defined in detail in the Terms and Conditions section of the MPN. Serious consequences occur with default:
- The United States Department of Education (ED) will require immediate repayment of the entire unpaid amount of the loan
- ED may sue, take all or part of the borrowers federal and state tax refunds and other federal or state payments, and/or garnish the borrowers wages so that the employer is required to send ED part of the borrowers salary to pay off the loan
- ED will require the payment of reasonable collection fees and costs, plus court costs and attorney fees
- ED will report the default to national consumer reporting agencies
- The borrower may be denied a professional license
- The borrower will lose eligibility for other federal student aid and assistance under most federal benefit programs
- The borrower will lose eligibility for loan deferments