Federal Direct Parent (Plus) Loans
Federal regulations require you and your parent to complete the Free Application for Federal Student Aid (FAFSA) before applying for a Federal Direct PLUS Loan.
IMPORTANT NOTE: It is our firm belief that students should borrow only when absolutely necessary, and then only to the extent that is needed. We encourage that serious and deliberate consideration be given to making any borrowing decision.
The Federal Direct Parent Loan for Undergraduate Students (PLUS Loan) enables parents with good credit histories to borrow in order to pay the education expenses of the student who is a dependent undergraduate student enrolled at least half-time. Please note that with regard to the Federal Direct PLUS loan, any reference to the 'borrower' refers to the parent and not the student.
Both the student and borrower must meet the general eligibility requirements for federal student aid. For example, both the student and borrower must be a citizen or eligible non-citizen and may not be in default or owe a refund to any federal aid program. To be eligible to receive a Federal Direct PLUS Loan, the parent borrower generally will be required to pass a credit check. If they do not pass the credit check, they might still be able to receive a loan if someone, such as a relative or friend who is able to pass the credit check, agrees to endorse the loan, promising to repay it if the borrower should fail to do so. The online endorser process is preferred and it can be completed at www.studentloans.gov. The Department of Education requires PLUS Credit Counseling if you have adverse credit history and obtained an endorser or submitted an appeal. The online PLUS Credit Counseling can also be completed at www.studentloans.gov.
To initiate the application process, please proceed to the Department of Education's website, www.studentloans.gov,. Under Parent Borrowers, complete the Federal Direct PLUS Loan Master Promissory Note (MPN) and the Apply for a PLUS Loan. You will need your FSA ID to login to the website.
If you are a continuing Federal Direct PLUS borrower and you did not use an endorser then you will not need to complete another Master Promissory Note. You will only need to complete the Apply for a PLUS Loan step at www.studentloans.gov.
INTEREST RATES AND FEES
Effective July 1, 2018, the interest rate is fixed at 7.595%. There is an origination fee of 4.264% of the loan amount that will be deducted proportionately at each disbursement.
ANNUAL LOAN LIMITS
The yearly limit on a Federal Direct PLUS Loan is equal to your cost of attendance minus any other financial aid you (the student) receive. If your cost of attendance is $54,000, for example, and you receive $40,000 in other financial aid, your parents can borrow up to an additional $14,000.
The parent borrower has the option of beginning repayment on the Federal Direct PLUS Loan either 60 days after the loan is fully disbursed (interest on the loan begins to accrue at this time) or waiting until six months after the dependent student on whose behalf the parent borrowed ceases to be enrolled on at least a half-time basis. During any period of authorized deferment or forbearance the borrower can choose to pay the interest or allow it to accrue (accumulate) and be capitalized (that is, added to the principal amount of your loan). Capitalizing the interest will obviously increase the amount you will have to repay over the life of the loan.
Funds are normally disbursed in two equal installments and are credited directly to the student's Vanderbilt Student Account.