Direct PLUS / Grad PLUS Loan Program
Parents of dependent undergraduate students who are enrolled on at least a half-time basis each semester can borrow a PLUS Loan to help pay education expenses. Graduate and Professional students can borrow under the "Grad PLUS" program.
NEW: Starting with the 2011-2012 year, families will need to complete the Free Application for Federal Student Aid ("FAFSA") before we will be allowed to certify an application for a Federal PLUS loan.
What Changed Starting in July 2010
On March 25, 2010, the U.S. House of Representatives and the U.S. Senate passed the Health Care and Education Affordability Reconciliation Act of 2010 ("HCEARA"-H.R. 4872) . This bill makes major changes in several federal student aid programs AND mandates that, effective July 1, 2010, all federal student loans (Stafford, PLUS, and Grad PLUS) will be originated through the Federal Direct Loan Program. The Family Federal Education Loan Program, which permitted private lenders to originate these loans, is eliminated effective June 30, 2010.
- Summary for Graduate and Professional Students (for the Grad PLUS Program)
- Parent Loan Debt is on the Rise (October 5, 2012)
- Read more about the transition to the Direct Loan Program
The Department of Education launched a new Web site that serves as a portal for Direct Loan borrowers to manage their Direct Loans. The new Web site is StudentLoans.gov. Borrowers will use the StudentLoans.gov Web site to:
- complete a Direct Loan Electronic Master Promissory Note; The borrower must sign in with his or her Federal Student Aid PIN to complete the MPN.
- The Direct Loan Electronic MPN process has been redesigned and streamlined. There are only 4 steps instead of 9 and many data fields will be pre-populated, if available.
- view electronic loan correspondence such as disclosure statements
- link to other tools and resources
- Beginning April 27, 2010, the StudentLoans.gov Web site will allow Direct PLUS Loan borrowers (both parents and graduate/professional students) to complete a request for a Direct PLUS Loan and initiate a credit check online.
Enhancements to Direct PLUS Loan Processing
A new method to process Direct PLUS Loans will be available on the StudentLoans.gov Web site. This optional process will allow a school to collect information needed to originate a Direct PLUS Loan. As an alternative to a school-based PLUS process, the Direct PLUS Loan Request for Supplemental Information (Direct PLUS Loan Request) will provide an online tool for parents and graduate borrowers to request a Direct PLUS Loan and initiate a credit check.
- Credit Balance Option -- Parent PLUS borrowers can indicate whether they want any remaining credit balance to be paid to the parent borrower or to the student. (This will replace our current PLUS Authorization Form)
- Award Amount Information-- Borrowers can request a specific amount they wish to borrow or can select the Maximum Amount Indicator, which indicates that the borrower wants the school to determine the maximum amount for which he or she would be eligible to receive.
Credit Check Processing
Direct PLUS Loan borrowers will be able to authorize and initiate a credit check during the Direct PLUS Loan Request process on the StudentLoans.gov web site.
Note: The credit check is a required step of the Direct PLUS Loan Request process. The process is different, however, than under the prior bank-based student loan program.
- The Direct Loan credit check looks for adverse credit and not "credit worthiness" ."Adverse credit" is a legal term defined in 34CFR 685.200 . It includes:
- Bankruptcy (Chapters 7,11, or 12 within the past 5 years) .Note: Department Policy does not consider Chapter 13 bankruptcy as adverse credit.
- Voluntary surrender within the last 5 years
- Repossession within the last 5 years
- Foreclosure proceedings started
- Foreclosure within the last 5 years
- Deed in lieu of foreclosure
- Accounts currently 90 days or more delinquent
- CHANGE:Unpaid (with a balance greater than zero) collection accounts and charge offs are considered adverse credit.
- Wage garnishment within the last 5 years
- Defaulted loan that has been claim paid
- Lease or contract terminated by default
- County/State/Federal tax lien, within the past 5 years
The borrower will receive the results of a borrower-initiated credit check immediately. Depending on the results of the credit check, a borrower will be provided information about the next steps they need to take.
If the borrower's credit is approved, he or she may be asked if they want to complete a Direct PLUS Loan Master Promissory Note ("MPN") (unless one is already on file).
NOTE: As we continue our transition from the Federal Family Education Loan (FFEL) Program into the Direct Loan (DL) Program we are noticing that some borrowers who were denied a PLUS in the FFEL Program for credit reasons are being approved under the DL Program.
Combine Borrowing With Available Monthly Payment Plans
We want to encourage all borrowers to consider utilizing our available monthly payments plans first and then borrowing only the minimum that you need to cover your costs. Learn more about the two plans administered through the Student Finance Office.
Right to Cancel:
Borrowers always have the right to cancel their loan applications. Borrowers whose loans have been certified for the upcoming academic term must submit a written request to the Office of Scholarships and Financial Aid to cancel their application with their lender. Upon receipt of a written request, the aid office staff will also return to the lender any loan funds that have been disbursed to a student's tuition account.
Updated August 10, 2013