Federal Direct PLUS
The Direct PLUS offers parents an excellent low-interest loan alternative to paying for college costs during the academic year. With the Direct PLUS Loan, a family can borrow up to the difference between the cost of attendance and the amount of any financial aid the student is receiving.
Direct PLUS Benefits
Benefits of the Direct PLUS include:
- low interest rate
- lower monthly payments
- an extended payment period for educational costs
- option of deferring repayment based on student’s enrollment status
Who May Apply
To borrow a Direct PLUS for a student, the parent borrower must be the student’s biological or adoptive mother or father. A stepparent whose assets and income are taken into account when determining the student’s expected family contribution is also eligible to borrow a Direct PLUS. There is no grace period for a Direct PLUS. Interest begins to accrue immediately after the first disbursement of the federal Direct PLUS, and repayment of both principal and interest begins within 60 days after the final disbursement of the loan.
Interest Rate and Terms
Interest rate is fixed at 7 percent for a Direct PLUS with a first disbursement on or after July 1, 2017 through June 30, 2018.
Direct PLUS Loans whose first disbursement is made between October 1, 2016 and September 30, 2017, are subject to an origination fee of 4.276 percent. Direct PLUS Loans whose first disbursement is made between October 1, 2017 and September 30, 2018, are subject to an origination fee of 4.264 percent.
There is no grace period for Direct PLUS. However, for loans disbursed after July 1, 2008, parent borrowers have the option of deferring repayment based on your enrollment status. Specifically, parent borrowers may defer repayment:
- While you, the student, are enrolled on at least a half-time basis, and
- During the six-month period after you cease to be enrolled on at least a half-time basis
The parent borrower may complete and submit the in-school deferment request form, by visiting the Direct Loan website or by calling the Direct Loan Servicing Center (DLSC) at 800.848.0979 for assistance. If the parent borrower does not choose to defer payment, repayment begins 60 days after full disbursement of the loan.
Interest will be capitalized until repayment begins. If a deferment is chosen, your parent will be sent a quarterly interest statement and will have the option of paying the interest as it accrues during the deferment period. The parent borrower may be allowed up to 30 years for repayment.
In addition, if a parent’s Direct PLUS application is denied due to unsatisfactory credit, the student is automatically eligible for an additional direct unsubsidized loan. First- and second-year students are eligible for an additional $6,000, and third- and fourth-year students are eligible for an additional $7,000 if the Direct PLUS is denied.
How to Apply
- Submit the Direct PLUS Loan Request (required each year) and Direct PLUS Loan Master Promissory Note (first-time PLUS borrowers only) at StudentLoans.gov. The Direct PLUS Loan Request includes four steps: School & Loan Info, Borrower Info, Review Request, and Credit Check & Submit. Parent borrowers must use their own FSA ID and not their child’s FSA ID to complete the PLUS loan request process.
- Submit the Authorization for Direct PLUS Loan Payment of Allowable Charges (PDF) (first-time PLUS borrowers only) to the Office of Financial Aid.