Direct PLUS Loans (Parent & Graduate)

Direct PLUS Loans (Parent & Graduate)

Direct PLUS Loans are part of the federal Direct Loan Program. Unlike most other federal student loans, PLUS Loans are not awarded when you apply for aid. Graduate/professional students and parents of undergraduates apply separately for the PLUS .if they need additional funds to cover college costs.Finding the right balance of access to college and manageable debt is an exercise that many families practice right around this time of year – when the tuition bill shows up. Even a great financial aid package can fall significantly short of the total bill, which means it’s time for some tough decisions.Earlier this month, the Department of Education issued new, draft rules that, if adopted, will change the eligibility criteria for both graduate and Parent Direct PLUS loans.

The Student Loan Ranger attended the meetings where the department worked with members of the financial aid and consumer advocate communities to develop a policy that both maintains access to higher education and helps protect borrowers from taking on more than they can handle.This week’s blog looks at some of the options available for parents of undergraduate students and some tips to ensure smart choices.After applying and being approved for a Direct PLUS Loan, the award will appear on your financial aid Award Notice. Borrowers must complete the Direct Loan Program requirements listed on this page in order to receive loan funds. See the appropriate links for other details, including how to apply for a Direct PLUS Loan.

ABOUT THE PLUS LOAN:-The Direct PLUS Loan is unsubsidized, so interest accrues while the student is enrolled at least half-time and during deferment periods. Eligibility is not based on financial need, and graduate students and parents of undergraduates may borrow up to the amount of the student’s Cost of Attendance, minus any other financial assistance a student receives.

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 or part of their Expected Family Contribution

PLUS Loans offer advantages compared to private education loans, including the stability of federal funding, a fixed interest rate, and repayment and deferment options. See the Eligibility, Loan Terms, and Requirements section below and the Comparing Supplemental Loans page for details.

ELIGIBILITY, LOAN TERMS, AND REQUIREMENTS:-Students (or their parents) must submit a Free Application for Federal Student Aid (FAFSA) when applying for a PLUS or Grad PLUS Loan. Borrowers must have an acceptable credit history or a loan endorser with an acceptable credit history. Families with adverse credit may sometimes borrow under PLUS if they can document extenuating circumstances.

Key information about PLUS:-Because credit reports are only valid for a limited time and we process PLUS Loan applications in July, we wait until early April to accept PLUS applications so that only one credit check is required.We will assume that your application is for the Fall/Winter terms. If you want the loan for one term only, advise us as soon as possible. We begin sending PLUS applications to the federal processor in early July. Eligibility is determined when your application is processed in July.Contact our office if you require a paper PLUS Loan application .

HOW TO APPLY: PARENTS OF UNDERGRADUATES:-In mid-April or later Sign in and select “Apply for a PLUS Loan” under the Parent Borrower section using your U.S. Department of Education FSA ID.  If you need an FSA ID. Do not use your student’s FSAID.Follow the steps to complete the application and credit check. In the School Name section, be sure to select University of Michigan-Ann Arbor.The results of your credit check will be available immediately. If your credit is approved, you will be given instructions for completing a PLUS Loan Master Promissory Note. If your credit is not approved, you will have the option to obtain an endorser, appeal the credit decision or not pursue the loan.If you and/or your student are eligible non-U.S. citizens, you must also submit a copy of your U.S. Citizenship and Immigration Services document to the Office of Financial Aid to verify your current citizenship status.

HOW TO APPLY: GRADUATE AND PROFESSIONAL STUDENTS:-Complete a Free Application for Federal Student Aid (FAFSA), if you have not already done so.In mid-April or later, Sign in and select “Apply for a PLUS Loan” under the Graduate/Professional Students section using your U.S. Department of Education FSA ID.  If you need an FSA ID, Follow the steps to complete the application and credit check. In the School Name section, be sure to select University of Michigan-Ann Arbor.The results of your credit check will be available immediately. If your credit is approved, you will be given instructions for completing a PLUS Loan Master Promissory Note, if you have not already completed one. If your credit is not approved, you will have the option to obtain an endorser, appeal the credit decision or not pursue the loan.If you are borrowing through the PLUS Program for the first time, you must also complete Direct Loan Entrance .

COMPLETING YOUR LOAN REQUIREMENTS:-If you are a Direct PLUS Loan borrower, you will be required to complete three Direct Loan Program requirements sign a master promissory note, complete entrance counseling and complete exit counseling.
Master Promissory Notes:-Parents and students borrowing for the first time through the Direct Loan Program must complete a Direct Loan Master Promissory Note (or MPN) to receive their loan funds. The MPN authorizes U-M to credit the Direct Loan funds to the U-M student’s account. Once you complete the MPN, you will not have to complete another Direct Loan MPN for 10 years. If you have accepted other federal loans (e.g., Perkins, Health Professions, or Nursing Loans), you will need separate promissory notes for those loans. The Office of Financial Aid will notify you of how to complete them. Visit this page for details about completing your MPN.If you prefer, you may complete a paper MPN, but there are more steps involved before approval and your loans could be delayed. To complete a paper MPN, ; select “Complete MPN” to complete the MPN electronically or “Print MPN” to print, complete and mail a paper MPN to our office.
Entrance and Exit Counseling:-Entrance Counseling: If you are a graduate student PLUS borrower, you must complete Direct Loan Entrance Counseling on the U.S. Department of Education’s .This interactive counseling session and quiz helps students develop budgets for managing educational expenses and also understand their loan responsibilities. You must complete the counseling before your loan funds can be disbursed to you. Parent PLUS borrowers are not required to complete entrance counseling.

Exit Counseling:- This is required for Direct Loan student borrowers who are graduating or dropping below half-time enrollment. This counseling session helps borrowers understand their rights and responsibilities in repayment and helps them choose a repayment plan. You must use your Department of Education FSA ID to access this counseling session. To complete the Exit Counseling session. Click the “Complete Counseling” link and follow the link to “Exit Counseling” to begin.

RECEIVING YOUR LOAN FUNDS:-You must sign all of your loan documents and students must be enrolled at least half-time to receive your loan funds.  See Disbursement of Your Aid Funds for information about how your loan will be paid to you. Each time you borrow through the Direct Loan program, you will automatically receive your loan funds unless you decline them.

ADVERSE CREDIT HISTORY:-Federal PLUS loans are credit based. If it is determined that you have an adverse credit history, you may still quality for a Direct PLUS Loan. Follow these instructions:
   -find an endorser with good credit (not the student for which the loan is being borrowed) or
   -document extenuating circumstances to the U.S. Department of Education Office of Federal Student Aid. Visit studentloans.gov and select “Parent Borrowers” where you will find a link to “Document Extenuating Circumstances.” Review does not guarantee approval; Federal Student Aid will determine your eligibility based on information provided.

In both cases, the parent will need to complete online PLUS Counseling.If a parent is unable to secure a PLUS loan for a dependent undergraduate, the student is eligible for additional unsubsidized loans to help with education costs. This increase is not available if any parent passes the credit check or an endorser is approved. The student should contact our office for assistance.

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