Parent Loan General Information
Parent Loans
What is a Parent PLUS Loan?
The Federal Direct Parent Loan for Undergraduate Students (PLUS) enables parents to borrow for their dependent undergraduate son/daughter. These loans are based on credit, not on need. However, the maximum amount borrowed may not exceed the difference between the school's cost of attendance and assistance received, including scholarships and other benefits.
What is the interest rate?
The PLUS Loan has no interest subsidy and should be regarded as a last resort for most students. Interest is currently set at 7.9% and has a cap of 9%. New PLUS loan interest rates through the Federal Direct Loan Program are fixed at 7.9 percent. PLUS borrowers will be charged 4 percent of the loan amount in an up-front origination fee. These fees are used to offset a portion of the taxpayer costs of administering the federal student loan program.
When do I apply for this PLUS loan?
You may submit the PLUS loan application anytime during the academic year until your student ceases attendance. PLUS loan requests must be processed before the last week of your student's enrollment for the period.
Do I have to borrow the full amount on the award letter?
No, the maximum amount you are eligible to borrow from the PLUS program is based upon your student’s cost of attendance, less any other financial assistance that will be received for the period of enrollment. You can apply for up to the maximum shown on the award letter. You are encouraged to borrow only the minimum amount necessary to assist with paying your student’s educational expenses. The PLUS loan, like all financial aid, is intended to be used for educational expenses only.
How do I apply for the PLUS Loan?
If a parent wants to borrow this loan, the student first accepts the loan on the award notice from PCC.
A. Go to www.studentloans.gov, sign in at “Manage My Direct Loan”
- Please identify yourself by clicking “ I am the parent of a dependent undergraduate student” You will sign in using your Federal Student Aid PIN in order to access your loan documentation
- Complete a Master Promissory Note (MPN) You must use a separate PLUS MPN for each dependent student for whom you obtain a PLUS loan
- Complete a Direct PLUS Loan Application. Information will be sent to PCC electronically. The Direct PLUS Loan Application gives the school information they need to create the Direct PLUS Loan.
The parent borrower will complete the electronic application indicating the amount he/she wants to borrow and sign a master promissory note electronically at https://studentloans.gov. During the application process, the borrower will be able to select to defer repayment while their student is attending school; specify if the loan funds may pay non-tuition charges; determine if any credit balance is refunded to the parent borrower or to their student; and the loan amount to borrow.
If the amount the parent wants to borrow is less than PCC Financial Aid has have currently listed on the student's award notice, then indicate the total amount to borrow on the electronic application.
B. Parent PLUS Loan Revision Request – use only after a PLUS has been certified for a current year. This form is available to make a variety of changes.
Do I need to pass a credit check?
To be eligible for the PLUS loan, a parent will be required to pass a credit check that will be performed by the Direct Loan Servicer. Parents will be notified directly by the Direct Loan Servicer if they are eligible to receive the PLUS loan.
What happens if I don’t pass the credit check?
If you, the parent, do not pass the credit check, you may pursue the PLUS loan by contacting the Direct Loan Servicer at 1-800-557-7394 to challenge the credit check, provide additional documentation or have an endorser sign for the loan with you. If you decide not to pursue the PLUS loan after a notification of denial from the Direct Loan Servicer, the student may apply for an additional unsubsidized loan
How do I reduce the PLUS loan?
After the initial application, if the parent wants to make changes to the amount applied for, notify the PCC financial Aid office if you want to borrow less and we will reduce the amount in the system. A parent may print Parent Plus Loan Revision Loan Request form from the PCC website.
How do I increase the PLUS loan? If you want to borrow more than your original application, then the parent borrower goes back to the Direct Loans website and selects to modify their previous application listing the total loan amount requested. PCC Financial Aid will download the parent application data from this website and update the PCC student record. Example: Your first loan was $2,000 and you want to add $3,000 then the new loan amount will be $5,000.
Will I be notified when loan is originated?
You will be sent a loan approval notice by the Financial Aid Office that the loan has been certified, the amount certified, when and how disbursement will occur each term and any other conditions required before receiving the loan funds.
How is a PLUS loan disbursed?
Funds are disbursed in multiple payments beginning the Wednesday of the second week of the term. Students are required to be enrolled at least half time (6-8 credits) and in good academic standing to be eligible for payments.
Portland Community College allows students to charge tuition, fees, books and supplies. In addition to these costs of attendance charges, other charges such as fines and finance charges can accumulate on the student’s college account.
At PCC, generally any tuition and fees previously paid will be deducted from the PLUS and the remainder of the funds will be mailed to the borrower (the parent) at the address listed on the Direct loan application. A Parent may request PCC to disburse funds to the student by checking the box on the Direct Loan PLUS Application. This authorizes Portland Community College to apply any PLUS funds toward institutional charges beyond tuition and fees. Remaining funds will be disbursed to the student.
When does repayment begin?
Repayment of the PLUS loan begins 60 days after the full amount borrowed for the school year has been fully disbursed. However, a Parent can request that the repayment be deferred while the student is attending at least half-time and up to 6 months after the student ceases to be enrolled on at least a half-time basis. Please keep in mind that interest continues to accrue during periods of deferral and the parent may want to make quarterly interest payments instead of capitalizing the interest in order to keep the overall loan debt down.
Loans borrowed through the Federal Direct Loan Programs are borrowed directly from the federal government. Repayment arrangements are handled by the Direct Loan Servicer (a servicer contracted by the federal government). Parents might have earlier PLUS loans though a private lender such as Wells Fargo or Sallie Mae. It’s important to maintain contact with them.
How much does a borrower repay each month?
The amount a borrower repays depends on how much is borrowed, the interest rate and over how many years the loan will be repaid. Put these amounts into the Direct Loan Repayment Calculator http://www2.ed.gov/offices/OSFAP/DirectLoan/calc.html to get the amount of monthly repayment.
Are there different payment plans?
The Parent Loan program has different payment plans parents can choose from in repaying the loan. Generally, you will have from 10 to 30 years to repay their loan, depending on the repayment plan chosen. The monthly payment amount will be based on how much is borrowed and how long it takes to repay. Parents may choose one of three repayment plans:
- Standard Repayment Plan - Fixed monthly payments for up to 10 years.
- Extended Repayment Plan - Fixed monthly payments for 12 to 30 years, depending on the total amount of the Parent Loans.
- Graduated Repayment Plan - Payments that start off lower, and then gradually increase, usually every two years. The loan is repaid in full within 12 to 30 years, depending on the total amount of the Parent Loans.
Parent borrowers can change plans at any time. There's no penalty if a borrower makes payments before they are due or pay more than the amount due each month.
Where does a borrower repay their loans?
If a borrower has a Direct Stafford/Ford loan, repay the loan to the https://www.dl.ed.gov/ Direct Loan Servicer.
Need More Answers?
For additional information, go to www.studentaid.ed.gov to the Direct Loan web site. Click Federal Student Aid Programs then click PLUS Loans (Parent Loans). It is always important to review the conditions and terms of any loan. This site provides great detail.
Parent PLUS loan revision request – use only after a PLUS has been certified for a current year.