Franklin & Marshall College Franklin & Marshall College

Federal PLUS Loans for Parents

Federal Direct Parent Loan Information

Federal Direct PLUS Loan for parents  is a popular option for families who wish to use a low-interest loan as a means of covering their student's college expenses.   A parent can borrow up to the total cost of education less any financial aid/loans the students has been awarded.   

Who can Borrow the PLUS loan? Biological or adoptive parents of full-time or half-time dependent undergraduate students; not contingent upon income level. consideration For Direct PLUS loan includes a required credit check. Parents and students must be U.S. citizens or eligible non-citizens. FAFSA for student must be filed.

How much can a parent borrow? Up to the total cost of educational expenses less other financial aid accepted by the student. No maximum loan amount per borrower.

What happens if I am denied the PLUS loan?  Your student would then be eligibile to borrow additional Unsubsidized Federal Direct Loan.  

$4000 for freshmen and sophomores              $5000 for juniors and seniors.

Interest Rate:  The interest rate for the 2014-2015 year will be a variable/fixed rate of 7.21%.   The origination fee of 4.288%  is deducted from the loan prior to its disbursement.

Note:  Federal Direct PLUS loans with a FIRST disbursement date of Oct 1, 2014 or after will be charged 4.292% in loan fees.

Note:  Effective July 1, 2013 interest rates on Federal Direct PLUS loans will be determined each July based on the 10-Year Treasury Note Index plus an add-on of 4.60% with a cap of 10.5%.  The rate will be fixed for the life of the loan. 

Repayment Terms: Payment of principal and interest begins 45 days after disbursement of the loan with a minimum monthly payment of $50.00. Repayment may last up to 10 years. You may prepay at any time without penalty. Loan consolidation and graduated repayment options are available.

Advantages to Borrowing a Federal Direct PLUS loan.....

  • Easy application process; sign Master Promissory note once
  • Parents must be creditworthy (not based on debt to income ratio)
  • Completion of the FAFSA is required in order to apply for a PLUS Loan.
  • 10 year repayment term with flexible repayment plans available
  • Immediate repayment begins 45 days after loan is fully disbursed
  • Repayment can be deferred until 6 months after the student graduates or drops below half time enrollment
  • Interest may be tax deductible; for more details click here
  • No penalty for early repayment
  • Federally insured against death or permanent disability 

When to Apply:  In most cases, applicants should allow three weeks of processing time before the funds are needed. However, if the funds are needed for the beginning of the fall semester, Direct PLUS Loan applications should be made by mid-June.  If funds are needed for the beginning of the spring semester, apply in mid November. It is also best to wait until the student's aid award is complete so that you know the amount of loan eligibility.

How to Apply for the Federal Direct PLUS loan for parents:

  1. Go to www.studentloans.gov
  2. Sign In with PARENT social security number, PARENT date of birth and PARENT federal PIN.     If you do not have a PIN you can register for a PIN on the website.
  3. Under Plus Loan Process click on Request a Direct  Plus Loan and complete the information.  All the information and credit decision will be transmitted to our office.
  4. You will be prompted to sign the Master Promissory Note (MPN)

Note:  Loan fees of 4.288% will be deducted from the amount you borrow so please keep this in mind when calculating the amount you need to borrow.

HELPFUL TIP:  Here is a formula to calculate the loan amount you will need to borrow to allow for loan fees:   Amount of PLUS you need divided by .95712 = gross loan amount you need to borrow. 

The school will originate your loan and schedule two equal disbursements for fall and spring.