The U.S. Department of Education administers a loan program for students called the Federal Direct Parent (PLUS) Loan. Parents can borrow a PLUS Loan to help pay your education expenses if you are a Dependent, undergraduate student enrolled at least half-time in an eligible program at an eligible school. Parents must be creditworthy.
Step 1: Student and parent must complete the Free Application for Federal Student Aid (FAFSA).
In order to electronically sign your form, you will need an FSA ID. In the past, families and students used a federal PIN number. These PIN numbers are now being replaced with the new FSA ID process. Even if you have an existing PIN number, you will need to follow these steps in order to Create an FSA ID.
Step 2: Go to studentloans.gov. Sign in using the parent’s name, Social Security Number, date of birth, and FSA ID.
Step 3: Select “Request Direct PLUS Loan”, then select “Parent PLUS."
Step 4: Complete the PLUS Loan Master Promissory Note (MPN).
The annual limit on a Federal Direct Parent (PLUS) Loan is equal to LMU’s Estimated Cost of Attendance minus any other financial aid you receive. For example, if your cost of attendance is $10,000, and you receive $6,000 in other financial aid, your parents can borrow up to $4,000.
The Bipartisan Student Loan Certainty Act of 2013 sets the annual interest rate on Direct PLUS Loans at the rate on high-yield 10-year Treasury notes plus 4.6%, but caps that rate at 10.5%. As a result, rates are expected to change annually. Parents that borrow the PLUS Loan over multiple years will have a set of fixed-rate loans, each with a different interest rate.
The Direct PLUS Loan program requires an origination fee be deducted from each disbursement. The net disbursement is the gross loan amount, less origination fees.
If a student's parents are divorced, both the custodial and non-custodial parent may borrow a PLUS loan for their dependent, undergraduate student. A step-parent may only borrow a PLUS loan if they are married to the custodial parent and their financial information was reported on the FAFSA of record.
The borrower has the option of beginning repayment on the PLUS loan either 60 days after the loan is fully disbursed or to begin repayment six months after you graduate or cease to be enrolled on at least a half-time basis. Interest will accrue during periods of deferment. Before borrowing the PLUS loan, you should take advantage of the Department of Education's Direct Loan Repayment Plan calculator. Parent Direct PLUS Loan borrowers may only choose from the standard, extended, or graduated repayment options.
Endorser - The borrower can re-apply for a PLUS loan with an endorser who does not have an adverse credit history. An endorser is someone who agrees to repay the Parent PLUS Loan if the parent does not repay the loan. The PLUS Loan endorser cannot be the student. The endorser will be required to obtain a FSA ID. The endorser will then need to use a unique PLUS Endorser Code and URL provided by the borrower to complete the Endorser Addendum for the Parent PLUS Loan at www.studentloans.gov.
Appeal - The borrower may appeal the adverse credit decision if they believe extenuating circumstances may exist. For more information, visit www.studentloans.gov
Federal Direct Unsubsidized Federal Loan - Students whose parents are denied a PLUS loan may qualify to receive additional Unsubsidized Federal Loan.
Private (Alternative) Loan - Students may apply for a private (alternative) loan. We encourage private (alternative) loans to be borrowed as a last resort. Click here for more information.
Once LMU has determined that a student has completely withdrawn, Return of Title IV Funds (Federal Financial Aid Policies) calculation will be performed within 30 days. LMU will notify the student in writing of their revised eligibility after the Return of Title IV Funds calculation is completed. If the student owes unpaid tuition and fees, the student will receive an updated invoice from the university.
The responsibility to repay unearned aid is shared by the institution and the student. Students might be required to return additional funds directly to the Department of Education. If this occurs, you will be notified in the written letter that is sent to you by the office of Financial Aid.
If a credit balance remains on the LMU student account after the Title IV return of funds calculation has been completed and all university charges are paid, the balance will be refunded to the student (or parent in the case of a Parent PLUS Loan). If the student would like the credit balance to be used to repay a student (or parent) educational loan, the student is responsible for using their credit to make payment to the loan servicer.
What is a PLUS loan?