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Direct Parent PLUS 2012-2013

by Partin,Wesley B last modified Jul 09, 2012 10:01 AM

Direct PLUS Loans (Parent Loans for Undergraduate Students) are part of the federal Direct Loan Program, which offers low-interest loans to students and parents to help pay for a student’s college education.  The loans are called Direct Loans because they are made directly from the U.S. Department of Education, without going through a bank or other lender.

Unlike other federal student loans, Parent PLUS Loans are not awarded to students when they apply for aid. Instead, parents of undergraduates apply for these loans separately if they need additional funds to cover the student’s educational costs.

The Direct PLUS Loan may be of particular interest to students and parents who:

  • Are not eligible for other types of financial aid,
  • Have unusual costs above the standard student expense budgets,
  • Have remaining financial need after other forms of financial aid have been awarded, or
  • Wish to borrow all of part of the student’s EFC (Expected Family Contribution)


Eligibility

  • You need to be the biological or adoptive parent of the student for whom the Federal PLUS Loan is being borrowed.  The spouse of a parent who has remarried (i.e., the student’s stepparent) is also eligible to borrow a PLUS on the student’s behalf, if his/her income and assets have been included on the student’s FAFSA (Free Application for Federal Student Aid).  Both parents may get a PLUS loan providing the total aid package does not exceed the student’s cost of attendance. The parent borrower must be the same person who completes the Master Promissory Note.
  • You and the student must be a U.S. citizens, U.S. nationals or permanent residents of the United States.
  • The student needs to be an eligible dependent undergraduate student who is enrolled at least half time (six credit hours) in a program leading to a degree or certificate at the University of Louisville.
  • The student needs to have a current official FAFSA on file and have received an award notification from our office.
  • You and the student must not be in default on a federal student loan and must not owe a refund on a federal education grant.
  • You cannot be 90 days or more delinquent on the repayment of any debt (180 days delinquent on mortgage loan or medical bill payments) or the subject of a default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off of a Title IV debt during the last five years. 
  • You need to meet specified credit requirements.   If parents are denied a PLUS loan due to adverse credit, the student will become eligible to apply for additional unsubsidized Direct Stafford loans. Amounts vary depending on the student's academic level.  The student must contact the financial aid office if you have been denied a PLUS loan.  Please see application procedures below.

Borrowing Limits for PLUS Loans

The parent borrower may borrow an amount up to the cost of attendance minus other financial aid.  If you request a loan amount greater than your eligibility, the loan will automatically be reduced to the maximum amount eligible.  If the student’s award package changes after the PLUS is awarded, the PLUS loan and/or loans in the student’s name are subject to adjustment.

Repayment, Interest, and Fees

A Parent PLUS Loan is borrowed by the parent, not the student. Responsibility for repayment rests with the parent. Interest is charged on the loan from the date the first disbursement is made until the loan is paid in full. Repayment begins within 60 days after the final loan disbursement. However, a parent may apply for an in-school deferment by contacting the Direct Loan Servicing Center at 800-848- 0979 while the student is attending at least half-time in a degree program. For more information regarding Direct Parent PLUS loans, such as interest rates, repayment, and more please visit http://studentaid.ed.gov.

How Parents Apply

  1. The student must have a current official FAFSA on file and have received an award notification from our office.  Do not complete the next steps if this step is not complete!
  2. Credit checks are only valid for 90 days, therefore we wait until June 1st to accept PLUS applications and we process PLUS Loan applications in July.  This saves you from requiring another credit check at the time your application is processed.
  3. After June 1, Go to StudentLoans.gov. (Note: This is the U.S. Department of Education’s Student Loan website, which has a .gov extension.  Do not use studentloans.com, which is a commercial website.) 
  4. Sign in (under Manage My Direct Loan) using your U.S. Department of Education Personal Identification Number (PIN).  If the parent borrower does not already have a PIN, they will need to apply for one through www.pin.ed.gov.
  5. When the next page opens, select Request PLUS Loan from the menu in the left-hand column (or Start PLUS Application Process in the center of the page).
  6. Follow the steps to complete the application and credit check. In the School Name section, be sure to select University of Louisville.  Be sure to complete all questions and use your legal name as is appears on your Social Security card.
  7. The results of your credit check will be available immediately.
    1. If your credit is approved, you will be given two options:
      1. Not continue with the application, or
      2. Continue and complete a PLUS Loan Master Promissory Note, if you have not already completed one
    2. If your credit is not approved, you will be given these options:
      1. Not pursue the loan,
      2. Obtain an endorser, or
      3. Appeal the credit decision
  8. If you do not pass the credit check and the student wants to apply for the additional Unsubsidized Direct Stafford Loan, the student must submit a request to our office.  Please send an email to the financial aid service account at finaid@louisville.edu with the subject line of “PLUS Loan Denial.”  Indicate your student ID, name, and contact information.  Type the text “My parent(s) were denied a PLUS Loan and do not plan to pursue the loan by obtaining an endorser or appealing the credit decision. Please consider me for the additional Unsubsidized Direct Stafford Loan.”  Requests for additional Unsubsidized Direct Stafford Loans will be reviewed no earlier than mid-July assuming the student meets all other federal eligibility requirements. 
  9. If you are an eligible non-U.S. citizen, you must also submit a copy of your U.S. Citizenship and Immigration Services document to the Student Financial Aid Office to verify your current citizenship status. Copy both sides of the document, write “PLUS Loan”, the student's name, and UofL ID on the copies, and fax them to our office at (502) 852-0182 or send them electronically.
  10. You may contact our office to receive a paper version of the PLUS Loan application.  The paper application is longer and you will not know credit check results until your application is processed.  After completing the application, you must fill out a master promissory note online.

After the Parent Applies

  •  After applying for and being approved for a Direct PLUS Loan, it will appear on the student's financial aid Award Notice.
  • After school begins and/or we receive the funds and confirm eligibility, the funds will be posted to the students account at the Bursar's Office. Parent PLUS funds are always applied/re-applied towards the student's charges. If the Parent PLUS proceeds exceed the student's charges, the university's Bursar's Office will mail a check to the parents' mailing address (as listed on the Federal Parent PLUS Request form).


Direct PLUS Denial Exemption

Dependent students may be eligible for additional unsubsidized loan amounts if the student can document exceptional circumstances which prevent a parent from borrowing a PLUS loan.  Exceptional circumstance may include:

  • The parent is incarcerated.
  • The parent has filed for bankruptcy and has provided a letter from the bankruptcy court stating that as a condition of the bankruptcy filing, the parent may not incur any additional debt.
  • That parent's income is limited to public assistance or disability benefits and you have documented that the parent would not be able to repay the PLUS loan.
  • The parent of a dependent student is not a U.S. citizen or permanent resident, or is not able to provide evidence from the U.S. Citizenship and Immigration Service that he or she is in the United States for other than a temporary purpose with the intention of becoming a citizen or permanent resident.
  • If a student's parent cannot process a PLUS loan due to one of these exceptional circumstances, please complete the Direct PLUS Denial Exemption Form (adobe pdf).


Fore More Information

Funding Your Education, The Guide to Federal Student Aid
http://studentaid.ed.gov/students/publications/student_guide/index.html

StudentLoans.gov, Direct Loan Overview for Parents
http://www2.ed.gov/offices/OSFAP/DirectLoan/parent.html

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