Federal PLUS Loan Program (For Parents and For Graduate or Professional School Borrowers)

Graduate or professional students who wish to take advantage of this program do not need to demonstrate financial need. Repayment of principal and interest begins within 60 days after the funds are disbursed. Under this program, borrowers may defer the payment of principal under certain circumstances. Borrowers should contact the lender for more information.

Note: Parents of dependent undergraduate students may also borrow through the Federal PLUS Loan Program. For more information, refer to the Federal PLUS Loan Program page within the Parent Zone.

Eligibility

To be eligible, you must:

• Be a U.S. citizen or eligible non-citizen
• Have had your eligibility criteria for the Federal Stafford Loan determined, which is done by completing the Free Application for Federal Student Aid (FAFSA)
• Undergo a credit check by the lending institution (loans will be denied to applicants with adverse credit, as defined by federal regulations)
• Undergo any further eligibility criteria required by the lender
• Not be in default on an educational loan or owe repayment on a federal or state grant

Choosing a Lender

When borrowing through the Federal Family Education Loan Program, your loan comes from a lending institution. Borrowers are free to select whichever lender they choose, so you may want to compare the level of benefits and customer service offered by various lenders and choose based on which one best meets your individual needs. There are several factors you may wish to take into consideration, such as whether a lender discounts the federal loan fees, or if rebates or other special discounts are offered for making a series of consecutive, on-time payments.

The U.S. Department of Education (ED) and the Federal Trade Commission (FTC) offer Student Loans: Avoiding Deceptive Offers, which is a free consumer guide for college students (and their families) seeking new loans or consolidating existing loans.

How to Apply

The financial aid administrator at your college determines your eligibility for the loan and can provide the proper application documents. The lending institution will also have the proper forms available and will either approve or deny each loan application.

A chart, which conveniently outlines FFELP loan limits, interest rates and applicable fees in one document (for loans first disbursed on or after July 1, 2009 through June 30, 2010), is available here at College Zone. Specific details regarding each of these topics are provided in the following sections.

Current Interest Rate for Federal PLUS Loans

The current Federal PLUS loan interest rate is fixed at 8.5%.

Loans disbursed prior to July 1, 2006 have a variable interest rate, adjusted annually on July 1, with a maximum of 9%. The Federal PLUS loan variable interest rate for July 1, 2009 -
June 30, 2010 is 3.28%.

Loan Limit

The annual maximum amount that can be borrowed under the Federal PLUS Loan Program is equal to the Cost of Attendance minus (-) financial aid received. There is no aggregate maximum.

Fees and Disbursements

A federal loan origination fee of three percent of the loan amount is deducted from your Federal PLUS Loan proceeds prior to disbursement. A default fee (formerly the guarantee fee) of one percent of the loan amount is also charged.

For loans guaranteed by ISAC on or after July 15, 2008, ISAC pays one-quarter (25%) of the one-percent federally-mandated default fee for Federal PLUS loan graduate students, but does not pay any portion of the default fee for Federal PLUS loan parent borrowers. The portion of the default fee not paid by ISAC must be paid by either the lender or the borrower. (Continuation of this benefit is subject to periodic review).

Rights and Responsibilities, Repayment, Deferments

When you borrow a Federal PLUS Loan, you should be aware of the borrowing basics which are outlined in the Student Zone at collegezone.com.