Federal Direct PLUS Loan
The Federal Direct PLUS Loan is a part of the William D. Ford Federal Direct Loan Program. Direct PLUS Loans are available to parents or legal guardians of dependent undergraduate students. Direct PLUS Loans are designed to cover any portion of the student’s estimated cost of attendance not already being covered by other types of financial aid.
To be eligible for a PLUS Loan, both the student and the parent borrower must meet the following qualifications: 1) the individual must be a U.S. citizen, U.S. national, or an eligible non-citizen, 2) the individual must provide his or her valid social security number, 3) the individual must not be in default on any federal education loan, 4) the individual must meet the guarantor’s requirements with respect to state of residence or regional service area, and 5) the individual must not have been determined to be ineligible for a Stafford or PLUS loan that has already been obtained. In order to verify that the student and the parent borrower meet all of the aforementioned criteria, Lewis & Clark requires that a FAFSA be filed before the origination of any PLUS Loan.
How to Apply
If you have not yet filed a Free Application for Federal Student Aid (FAFSA), you must do so before your Federal PLUS Loan may be originated. You can file your FAFSA online at www.fafsa.ed.gov.
Fees and Disbursement
UPDATE: Due to sequestration, all Direct PLUS Loans with a first disbursement date on or after December 1, 2013 and before October 1, 2014 will have an origination fee of 4.288%.
All Direct PLUS Loans with a first disbursement date on or after July 1, 2013 will have an origination fee of 4.204%.
Be aware of this fee when determining the amount that will be received and applied to the student account. Use the net disbursement amount (principal minus fee) when completing the “Estimating College Costs” worksheet.
PLUS Loan funds are disbursed to student accounts at the beginning of each semester. The loan amount will be divided evenly between each semester of enrollment during the academic year. We will notify you when PLUS funds have been disbursed.
Returning loan funds to your lender
We will return loan funds if your written request is received within 14 days after the disbursement notification has been sent to you.
After this time, you can return Direct Loan funds by check to your servicer. For information about your servicer, please visit NSLDS.
To ensure that the payment is properly credited, you will need to include a cover letter stating whether the funds are for a loan payment or for canceling (inactivating) a loan. This note should indicate which loan(s) the returned funds should be applied to, and in what amounts (if repayment is split between loans).
A borrower has up to 120 days after the disbursement date to return Direct Loan funds without being responsible for paying fees and any accrued interest on the amount canceled.
Deferment of Payment and Forbearance
Payment of a PLUS Loan may be deferred if the student is enrolled in school on at least a half-time basis or is engaged in a graduate fellowship. Payment may also be deferred if the borrower is unemployed or in a situation of demonstrable economic hardship. During a deferment, interest continues to accrue on the loan and may be capitalized (added to the principal of the loan).
In situations not covered by deferment, a borrower may ask for a forbearance. By granting forbearance, the lender permits a temporary cessation of payments, allows an extension of time for making payments, or temporarily accepts smaller payments than were previously scheduled.
Interest and Repayment
UPDATE: Federal Direct PLUS Loans with a first disbursement date of July 1, 2013 or later have a fixed interest rate of 6.41%.
PLUS Loans with a first disbursement date prior to July 1, 2013 and after July 1, 2006 have a fixed interest rate of 7.9%.
A PLUS Loan borrower enters repayment at the time the loan is fully disbursed. The lender must notify the borrower of the terms and conditions for repayment of the loan before repayment is scheduled to begin. The minimum monthly payment is $50.00. A borrower is allowed at least 5 years (unless the minimum required payment will retire the debt in less time), and no more than 10 years, to repay a PLUS loan. A borrower may prepay his or her loan in full or in part at any time, without penalty and without liability for unearned interest.
Alternative repayment schedules and deferment or forbearance options are available on all federal student loans, including the PLUS Loan. Extended repayment plans (up to 25 years) are available for borrowers with federal education debt exceeding $30,000.
The following table is based on a standard 10 year repayment plan. Use this table to estimate the monthly payment amount for your Federal Direct PLUS Loan(s).