Parent Plus Loan General Information

PLUS (Parent Loan for Undergraduate Students) is a low-interest federally funded loan for parents of dependent students. These loans enable parents with good credit histories to borrow funds to pay educational expenses. The amount of the loan may not exceed the cost of attendance minus other financial aid the student will receive.

WHO IS ELIGIBLE?

A parent (the borrower) is eligible to apply if he or she is:

• The natural parent, adoptive parent or spouse of a remarried parent of an eligible dependent, undergraduate student.
  
• A U.S. citizen, U.S. national or eligible non-citizen.
• Not in default on any Title IV loan program.
• Must have a good credit history. Any adverse credit may cause the application to be denied.

Also, the student for whom the parent is borrowing must be:

• Dependent student (As defined by FAFSA)
• Enrolled at least half-time
• Maintaining Satisfactory Academic Progress.

WHAT IS THE INTEREST RATE?

The interest rate on a Federal PLUS Loan is a variable rate and can change annually on July 1 but will not exceed 7.9%. Each lender should have the current interest rate listed on their web page.

WHAT FEES MUST BE PAID?

There is an origination fee of up to 4%, which is paid to the U.S. Department of Education to help offset the cost of operating the Federal PLUS Loan Program. These fees will be deducted from the disbursement(s) of the loan.

Example:

Loan Amount		$ 5,000
Origination Fee (3%)		(150)
Total Amount to Disburse		$ 4,850
Amount Disbursed for Fall		$ 2,425
Amount Disbursed for Spring		$ 2,425

WHEN WILL THE FUNDS BE RECEIVED?

After the loan has been guaranteed and the government has received a valid and signed promissory note, the government will disburse the proceeds in two payments. Loan funds will not be sent until classes begin each semester. If the parent has a one semester loan (e.g., Fall only), the second disbursement will be sent at the mid-point of the semester. Two semester loans (e.g., Fall/Spring) will be sent at the beginning of each semester.

HOW ARE TUITION AND FEES PAID?

The government transfer the loan proceeds to the school electronically. The loan funds are credited to the student"s account. Any amount owed to MTSU will be deducted from the loan funds. If the loan proceeds are more than what is owed, a PLUS refund will be given to the parent or student (if the parent authorizes).

WHEN SHOULD I APPLY?

Parents and students should begin completing the Free Application for Federal Student Aid (FAFSA) after they file their taxes each year. It is recommended that you complete the FAFSA in February. Parents should begin the pre-approval process in May before school begins in August. However, parents may still apply for the PLUS Loan even after the semester begins as long as the student is enrolled at least half-time. But, if the parent needs the PLUS loan to pay for tuition and fees by the scheduled payment deadline dates, the PLUS loan should be certified by mid-July.

WHEN DOES THE LOAN HAVE TO BE REPAID?

Repayment can begin anytime after the loan has been fully disbursed. Repayment can be deferred until the student graduates or is no longer enrolled for a six month period. The loan must be repaid within 10 years and the minimum monthly payment is $50.00, or higher depending upon the total amount borrowed. All or a portion of a Federal PLUS Loan may be repaid at any time without penalty.

WHAT HAPPENS IF THE PLUS LOAN IS DENIED?

If a parent is denied the PLUS Loan due to adverse credit history, the student is eligible to receive additional Unsubsidized Direct Loans. Freshmen and Sophomores may apply for up to $4,000, and Juniors and Seniors may apply for up to $5,000. The student will need to request the additional Unsubsidized amount by notifying the Financial Aid Office. To determine if a parent would be pre-approved or denied a PLUS Loan, click on "Apply Now" on the PLUS main web page. You will be taken to the government application site. The government will notify the parent and school if the loan has been pre-approved or denied.

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