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Guide to PLUS Loans

August 18th, 2011 at 09:51 pm

If your child is going to college and needs financial assistance you may want to look into the possibility of getting a Direct PLUS Loan. Loans of this type are provided through the federal government if certain criteria are met. A Direct PLUS Loan is different from a student loan because it is taken out by the parents, not by the student. Following is a guide to PLUS loans.

Dependent Children

One of the main components of a Direct PLUS Loan is the fact that the parents take out the loan for a dependent child. A dependent child is defined as a child less than 24 years of age who does not have any dependents of their own. The child canít be married. They also can not be a veteran, or have a graduate or professional degree. The dependent child must not be a ward of the court. If these conditions are met you should be able to qualify for a Direct PLUS Loan--depending on your financial situation. Graduate and professional students may apply for PLUS loans on their own.

Additional Qualifications

A few additional qualifications apply. You must be the studentís real or adoptive parent. In some cases you may qualify if youíre a stepparent. The child must go to a school that participates in the Direct Loan Program, and they must attend classes at least half-time. This may include traditional schools that award a campus-based degree or web-based schools that award an online degree. Your credit rating canít be in question. If you fail a credit check, the only way to qualify--unless there are extenuating circumstances--is if someone who does pass the credit check is willing to cosign the loan. Other qualifications are U.S. citizenship--noncitizens may be accepted provided they are eligible--and not being in arrears on a federal student loan.

How to Get a Direct PLUS Loan

You must fill out a Direct PLUS Loan application and a Master Promissory Note (MPN), which is a legal document stating that you will repay the loan, including interest and applicable fees, according to agreed upon criteria. Usually one MPN will suffice for your childís academic career. Instructions on filling out the forms are available through the financial aid office at your childís school. You may also be able to fill out the applicable forms online by visiting the Internet website,

Loan Details

There are no definite limits on the amount of money you can borrow in a Direct PLUS Loan. The only limitation is the fact that you can only borrow an amount equal to the difference between actual costs and the amount of any other sort of financial aid. For instance, if the annual cost for your childís high education comes to $20,000, and they receive aid in other forms, such as student loans, of $15,000, then, if youíre eligible, you are allowed to borrow the remaining $5,000 through a Direct PLUS Loan. The money will go to the school to be applied to the studentís costs, such as tuition, room and board, and other related expenses. The money will usually be given to the school in two payments. If any money is left over it goes to you unless you specify it for release to the student, or to be applied by the school toward future expenses.


You must begin repaying a Direct PLUS Loan within 60 days of the time the last of the loan money has been handed out. In certain cases a deferment may be granted. Repayment of the loan includes accrued interest and a 4% fee. At the time the loan is approved you will be put in touch with a loan servicer. Details of the loan will be discussed with the loan servicer, and you will have to agree to the stipulations before the loan is approved. A payment schedule will be provided by the loan servicer, and you will be provided with regular updates on the status of the loan. You can access details of your account by visiting the Internet website, The details of your loan will be determined by your financial status. A Direct PLUS Loan offers three payment plans, standard, extended, and graduated, and will usually need to be repaid between 10 and 25 years from the time the loan is granted.

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