The Federal Direct Parent Loan for Undergraduate Students (Direct PLUS Loan) Program
UMUC participates in the William D. Ford Federal Direct Parent Loan for Undergraduate Students (Direct PLUS Loan) Program. A Parent PLUS loan enables a parent to borrow for his or her dependent child. The U.S. Department of Education is the lender.
- How to Apply
- Loan Limit
- Cost of Borrowing
- Interest Rate
- Promissory Note
- Additional Information on Borrowing
Parents must apply for the Federal Direct Parent Plus Loan through StudentLoans.gov. You will need to sign into the site using your personal PIN number, which was required to sign your dependent student's FAFSA form. To apply for a PIN or receive another PIN, please visit Federal Student Aid Pin. Once you have signed into StudentLoans.gov, you may choose the "Start Plus Application Process" link.
The new StudentLoans.gov Web site gives you the option of applying to up to three institutions per dependent child and for multiple children during one application process. The site will also securely store your information to help streamline the process for future applications.
After you have completed the online application, the Department of Education (DOE) will process the application and credit approval. UMUC will receive this information from DOE within 24-48 business hours.
As the parent of a dependent student, you may borrow if you do not have an adverse credit history. The lender will perform a credit check before approving the loan. Should the U.S. Department of Education deny your application, your son or daughter may apply for an additional Federal Direct Unsubsidized Loan.
In addition, the student for whom you borrow must meet all general eligibility requirements.
- You do not have to demonstrate need to borrow a Direct PLUS Loan. If your son or daughter applies for student financial aid, your Financial Aid Award Letter from the Financial Aid Office will show the maximum amount you can borrow. Your Direct PLUS Loan offer equals the cost of attendance minus any other financial aid offered to your son or daughter for the current academic year.
Note: You do not have to borrow the full amount of the Direct PLUS Loan offered.
In addition to interest, you will pay 4 percent of the loan proceeds to the U.S. Department of Education as a loan origination fee. This fee will reduce the amount of loan money disbursed.
The interest rate for PLUS loans first disbursed on or after July 1, 2006, is a fixed 7.90%. Loans prior to that date have a variable interest rate that may change each year on July 1, and will never be more then 9.00%. The current interest rate for the period July, 2009 to June 30, 2010 is 3.8%.
Graduate students who borrow from the Direct PLUS program on or after July 1, 2006 will have a fixed interest rate of 8.50 percent.
Borrowing from the PLUS Loan program requires the completion of an Electronic Master Promissory Note (e-MPN). You can use the e-MPN to make one or more loans for one or more academic years while the student for whom you are borrowing is enrolled at UMUC.
The Bursar’s Office will credit loan proceeds to the student’s account to pay tuition and other university charges. Remaining funds go to you or—with your permission—directly to the student.
The repayment period for principle and interest begins the day after the loan has been fully disbursed. For example, a loan covering the fall and spring terms will enter repayment after the disbursement for the spring term. The first payment becomes due within 60 days after the final loan disbursement of loan proceeds for an academic year.
You will have three repayment options:
- The Standard Repayment Plan requires even monthly payments of at least $50 over a fixed period of up to 10 years. This plan usually results in the lowest total interest paid because the repayment period is shorter than under the other plans.
- The Extended Repayment Plan allows loan repayment over a period of 12 to 30 years, depending on the total amount borrowed. You still pay a fixed amount each month (at least $50), but the monthly payments usually will be less than under the Standard Repayment Plan. This may make the repayment more manageable; however, usually you will pay more interest because the repayment period is longer.
- The Graduated Repayment Plan allows payments to start out low and increase every two years. Your monthly payments must be at least half of what you would pay under Standard Repayment. As in the Extended Repayment Plan, the repayment period will vary from 12 to 30 years, depending on the total amount borrowed. Again, you may find it easier to manage the lower monthly payments; however, you will pay more interest because the repayment period will be longer.
NOTE: You can prepay all or a portion of your loan at any time without penalty.
You can estimate your monthly payments with various repayment plans with the repayment calculators available online from the U.S. Department of Education’s Direct Loan Web site.
For more information on the cost of borrowing or repayment, call the Federal Student Aid Information Center at 1-800-4FEDAID (1-800-433-3243).
You may defer payments if you meet one of several conditions show in the U.S. Department of Education's Loan Deferment Summary table.
You may be eligible for additional deferments if, at the time you obtain a Direct Loan, you have an outstanding balance on a loan from the Federal Family Education Loan Program (FFELP), including any Federal Stafford Loan, Guaranteed Student Loan, Federal PLUS Loan, Federal Supplemental Loan for Students, or Federal Consolidation Loan borrowed before July 1, 1993. The same deferments that apply to these FFELP’s can apply to your Direct Loan. If you are unable to make payments on your PLUS Loan for reasons such as unexpected personal problems or poor health, you may request forbearance if you do not qualify for a deferment. Forbearance allows you one of these options: postponement of payments, extension time between payments, or smaller payments than originally scheduled. Interest continues to accrue during a period of forbearance.
You may also receive forbearance if you serve in a medical or dental internship or residency, or if you serve in a position under the national and Community Service Trust Act of 1993, or if you are obligated to make federal student loan payments equal to, or greater than, 20 percent of your total monthly gross income (there is a three-year limit for this forbearance).
You can discharge a PLUS Loan under specific circumstances.
Consolidating your loans allows you to make only one monthly payment to cover your Federal Direct PLUS Loans and any federal student loans you may have for your own education.