Federal Parent Loan for Undergraduate Students (PLUS loan)
Related Link
Description
The Federal Parent Loan for Undergraduate Students (PLUS) are loans that may be available to biological, adoptive, and in some cases stepparents of dependent undergraduate students to cover some or all of the immediate costs associated with college. A pre-approval process will determine if a parent is able to borrow based on a credit review. PLUS loans must be repaid including interest. The maximum amount that a parent may borrow is the cost of attendance minus any other aid. Students with parents that are unable to obtain a PLUS loan may be eligible for an additional unsubsidized Stafford Loan.
Forms and Procedures to Apply
To apply for the Federal PLUS loan, students must:
- Apply to and be accepted to McPherson College
- Submit a Free Application for Federal Student Aid (FAFSA) and receive a result known as the Expected Family Contribution (EFC). The FAFSA is available at studentaid.gov/h/apply-for-aid/fafsa . Students should make sure to include McPherson College’s FAFSA code 001933.
To apply for the Federal PLUS loan, a parent must:
- Be pre-approved at studentaid.gov/plus-app/
- Complete a PLUS Master Promissory Note at studentaid.gov/mpn/parentplus/landing
- Completed PLUS entrance counseling only if the following apply:
- The PLUS loans was approved with an endorser (co-signer)
- The PLUS loans was approved only after successfully appealing an initial denial due to adverse credit
Eligibility Requirements
To be eligible for Federal PLUS loans at McPherson College, students must:
- Meet the general eligibility requirements as stated within the “Eligibility for Federal Student Financial Aid” section of the Consumer Information Page.
- Submit all forms for application
- Be considered a dependent student
To be eligible for federal PLUS loans at McPherson College, parents must:
- Submit all forms for application
- Be the biological or adoptive parent
- Be a stepparent that is currently married to a biological or adoptive parent
- Be pre-approved with
- Good credit
- A credit worthy endorser (co-signer)
- A successful appeal due to adverse credit
Criteria for recipient selection
To be considered for a Federal PLUS loan, students must be enrolled at least half time in an undergraduate degree program
To be considered for a Federal PLUS loan, parents must be pre-approved for a PLUS loan
Criteria for award amount
The actual award amount in any given year will be determined by several items:
- The maximum amount that a parent can borrow is the cost of attendance minus other financial aid that the student may be receiving.
- Requested amount – During the pre-approval process, parents will be presented with several options on how much they are willing to borrow. Parents can choose from several options:
- A specific amount
- A maximum amount to be determined by the students cost of attendance minus other financial aid
- An unknown amount which allows parents to move ahead with the pre-approval process and then discuss with financial aid representatives on how much would be appropriate
Terms and Conditions
Recipients of Federal PLUS loans agree to the following terms and conditions:
- Parents must pay back their PLUS loans, including any accrued interest even if:
- The student does not finish their degree
- The student cannot find employment
- The student is dissatisfied with their program of study
Parents that do not pay back their loans may go into default which can result in a negative result on credit scores, loss of future deferment eligibility, loss of eligibility for additional federal grants and loans, and garnishment of wages, tax returns and social security benefits.
- Interest is fixed each year, however, the rate may change from year to year
- 2021-22 Interest Rate – 6.28%
- Interest accrues on Federal PLUS loans at the point of disbursement. Parents are responsible to repay all interest that has accrued until paid in full.
- Parents may begin repayment while their student is in school. During the pre-approval process, parents will be presented with the option of an In-School deferment and a 6 month grace period
- Federal PLUS loan disbursements are subject to origination fees. Origination fees are deducted from the gross disbursement and are determined by when the loan was first disbursed.
- October 1, 2021 – September 30, 2022 – 4.228%
Parents are responsible to repay the gross loan disbursement. Parents should compensate for this fee when requesting a PLUS loan to cover a specific amount.
- October 1, 2021 – September 30, 2022 – 4.228%
- New parent borrowers must submit a PLUS Master Promissory Note.
- Federal PLUS loans are reported to the National Student Loan Data System, for which borrowers may monitor their loan portfolio. This information will also be accessible by lenders, servicers, guarantee agencies, and schools determined to be authorized users of the data system.
- Students will be sent a disbursement notification from McPherson College detailing a number of loan details including any Federal PLUS loan disbursements. Students and parents have a right to cancel their loans within 14 days of this disbursement notification.
- Federal PLUS loans will remain in the parents name until paid in full.
Repayment Schedules
Prospective parent borrowers may wish to estimate monthly repayment amounts. The following chart is provided for estimate purposes only.
Sample Repayment Schedule including Estimated Interest
Based on Standard 10 year repayment plan
| 4.29% | 5.00% | 5.84% | 6.84% | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Loan Amount | Minimum Payment | Total Interest | Principle plus Interest | Minimum Payment | Total Interest | Principle plus Interest | Minimum Payment | Total Interest | Principle plus Interest | Minimum Payment | Total Interest | Principle plus Interest |
| $1,000* | $50 | $40 | $1,040 | $50 | $47 | $1,047 | $50 | $55 | $1,055 | $50 | $65 | $1,065 |
| $5,500 | $57 | $1,274 | $6,774 | $59 | $1,501 | $7,001 | $61 | $1,775 | $7,275 | $64 | $2,109 | $7,609 |
| $10,000 | $103 | $2,316 | $12,316 | $107 | $2,728 | $12,728 | $111 | $3,227 | $13,227 | $116 | $3,835 | $13,835 |
| $15,000 | $154 | $3,474 | $18,474 | $160 | $4,092 | $19,092 | $165 | $4,840 | $19,840 | $173 | $5,752 | $20,752 |
| $20,000 | $206 | $4,631 | $24,631 | $213 | $5,456 | $25,456 | $221 | $6,453 | $26,453 | $231 | $7,669 | $27,669 |
| $30,000 | $308 | $6,947 | $36,947 | $319 | $8,184 | $38,184 | $331 | $9,679 | $39,679 | $346 | $11,503 | $41,503 |
| $40,000 | $411 | $9,262 | $49,262 | $425 | $10,912 | $50,912 | $441 | $12,905 | $52,905 | $462 | $15,338 | $55,338 |
| $50,000 | $514 | $11,578 | $61,578 | $531 | $13,640 | $63,640 | $552 | $16,132 | $66,132 | $577 | $19,172 | $69,172 |
| * At the minimum payment of $50 per month, this amount will be paid in 21-22 months | ||||||||||||
Repayment Plans
All Federal PLUS loans are set to a 10-year standard repayment plan. Borrowers may eligible for other types of repayment plans. Repayment plans outside of the standard often result in additional years of repayment and more interest paid over the life of the loan. These plans however, may prevent borrowers from going into default by offering lower monthly payments. To view a synopsis of other repayment plans, parents should:
- Go to studentaid.gov and Log In to your student account. Then hover over the Manage Loans heading and select the Loan Simulator.
OR - Go to studentaid.gov and hover over the Manage Loans heading. Select the Repayment Plans option under About Loan Repayment. This will provide a list of other potential repayment options. Consider logging in to the Loan Simulator to see estimated repayment figures based on actual loan data.
Criteria for continued eligibility
To continue receiving federal PLUS loans, students must:
- Meet the Satisfactory Academic Progress requirements as explained in the college catalog each semester
- Submit a new FAFSA each year
- Remain dependent
To continue receiving federal PLUS loans, parents must:
- Be pre-approved each year