What are Direct Parent PLUS Loans?
The Federal Direct Parent Loan for Undergraduate Students (PLUS) is available through the Direct Loan Program to help you pay for the education of dependent children.
Parent Eligibility for a Direct PLUS Loan
You must be the student's biological or adoptive parent or the student's stepparent, if the biological or adoptive parent has remarried at the time of application. Your child must be a dependent student who is enrolled at least half-time at a school that participates in the Direct Loan Program. For financial aid purposes, a student is considered "dependent" if he or she is under 24, unmarried, and has no legal dependents at the time the Free Application for Federal Student Aid is submitted. (Exceptions are made for veterans, wards of court, and other special circumstances.) If a student is considered dependent, then the income and the assets of the parent have to be reported on the FAFSA.
Advantages
- Option to defer payment until student graduates or drops below half time.
- A cost-effective alternative to depleting savings or retirement accounts, using current income or borrowing against home equity.
- The fixed interest rate is 7.08%.
- There is no prepayment penalty.
- The credit criteria are generally more lenient than for private loans.
- In cases of economic hardship, repayment may be deferred for up to three years.
- In the event of permanent disability or death of the borrower or student, your loan will be forgiven.
How much can be borrowed?
There are no set limits for Direct PLUS Loans, but you may not borrow more than the cost of your child's education minus any other financial aid received, such as a Direct Subsidized or Unsubsidized Loan. The school will determine the actual amount you may borrow.
Interest Rates
The interest rate for Direct PLUS Loans is a fixed rate of 7.08%. Interest is charged on Direct PLUS Loans during all periods, beginning on the date of your loan's first disbursement. To find out more information on interest rates for Direct PLUS Loans, please visit studentaid.gov.
Loan Fees
In addition to interest, you pay a loan origination fee that is a percentage of the principal amount of each Direct PLUS Loan that you receive. This fee helps reduce the cost of making these low-interest loans. The fee will be deducted before you receive any loan money, so the loan amount you actually receive will be less than the amount you have to repay. Dependent students whose parents have applied for but were unable to get a PLUS Loan are eligible to receive additional Direct Unsubsidized Loan funds. The origination fee for Direct Plus loans is 4.236%.
How do my parents apply for a direct plus application?
Mississippi College requires that we have a processed FAFSA on file before a Direct Plus can be originated.
To take out a PLUS Loan, you (the parent) must complete a PLUS Application and master promissory note (MPN), this can be done at StudentAid.gov.
The MPN is a legal document in which you promise to repay your loan(s) and any accrued interest and fees to the Department. It also explains the terms and conditions of your loan(s). The MPN can be completed at StudentAid.gov.
If you are borrowing Direct PLUS Loans for more than one student, you'll need to complete a separate MPN for each one. To complete an MPN online, you will be required to use your Department of Education-issued PIN (not your child's). If you do not have a PIN, you may request one from the official PIN site.
In most cases, once you've submitted the MPN and it's been accepted, you won't have to fill out a new MPN for future loans you receive to pay for the educational expenses of the same student. Unless your child's school does not allow more than one loan to be made under the same MPN, you can borrow additional Direct Loans on a single MPN for up to 10 years.
You'll receive a disclosure statement that gives you specific information about any loan that the school plans to disburse under your MPN, including the loan amount and loan fees, and the expected loan disbursement dates and amounts.
Please be aware that any refunds from Direct PLUS loans will be sent directly to the parent borrower. While the Department of Education’s Direct PLUS application asks parents whether they want any refunds to go to the student or the parent, Mississippi College sends all Direct PLUS refunds exclusively to the parent borrower.
