Federal Plus Loan Program at George Mason University
The Federal PLUS Loan, part of the Federal Family Education Loan Program, is a low-interest loan designed to provide parents of dependent undergraduate students with additional funds to finance their child's college education. This loan is a type of federal financial assistance that must be repaid.
Federal PLUS Loans are not based on financial need but are based on credit-worthiness.
These are common questions students and parents have about the Federal PLUS Loan program:
- Who is eligible to apply?
- How do my parents apply for a Federal PLUS Loan?
- How much can my parents borrow on my behalf as an undergraduate student?
- How much can my parents borrow on my behalf as a graduate or professional student?
- Why does it seem that my parents received less money than they actually borrowed?
- How often can my parents apply to borrow?
- What is the interest rate for Federal PLUS Loans?
- How many hours must I be enrolled for my parents to be eligible to borrow a Federal PLUS Loan?
- How are "full-time" and "part-time" defined?
- When do my parents begin repaying the Federal PLUS Loan?
- Can my parents get a deferment on repayment of the Federal PLUS Loan?
- How are Federal PLUS Loans disbursed?
- What happens if I drop classes or withdraw after my parents have received Federal PLUS loan funds?
- What if my parents have prior PLUS Loans under the FFEL program?
- Who will the lender be for Federal PLUS Loans?
Who is eligible to apply?
Parents of full-time and part-time dependent undergraduate students may apply. The program is limited to U.S. citizens and permanent residents. The students must be enrolled in a degree-granting program. Parents of non-degree students and guest students are ineligible for the Federal PLUS Loan Program. Parents of students in a second bachelor's degree program may also apply.
Beginning July 1, 2006, graduate and professional students who have used all their Stafford loan eligibility for the year are also eligible to apply for a "new" version of the Federal PLUS loan called the GradPLUS loan to cover up to the cost of attendance less any other aid received.
How do my parents apply for a Federal PLUS Loan?
All students whose parents are interested in applying for a Federal PLUS Loan at George Mason University must first complete the Free Application for Federal Student Aid. Once George Mason University has received your financial aid application information, we will send the student an award letter. This letter will indicate the student's eligibility for the Federal Stafford Loan and any other aid. Parents may apply for additional funds throught a Parent PLUS Loan.
The PLUS Loan application will be used to generate a PLUS Loan record. Your parents will receive information about completing a PLUS Loan Master Promissory Note and selecting a lender on-line.
How much can my parents borrow on my behalf as an undergraduate student?
Your parents may apply for a Federal PLUS Loan for an amount up to the "cost of attendance" less any other aid (including Federal Unsubsidized Stafford Loan) that you are eligible to receive.
How much can my parents borrow on my behalf as a graduate or professional student?
Because "graduate or professional" students are automatically classified by the federal government as independent, parents of these students are not eligible to borrow under the Federal PLUS Loan program. Graduate and professional students who have used all their Stafford Loan eligibility for the year are also eligible to apply for a version of the Federal PLUS Loan called the GradPLUS Loan, to cover up to the cost of attendance less any other aid received.
Why does it seem that my parents received less money than they actually borrowed?
The Federal government charges an insurance fee against all loans that it guarantees which is equal to 4% of the gross loan proceeds. This insurance fee is deducted proportionally from the loan proceeds before they are disbursed. Some lenders may absorb the cost of the fee and charge nothing to the parent borrower.
How often can my parents apply to borrow?
Once your parents have borrowed up to the cost-of-attendance less other aid, they must wait until the beginning of the next academic year to be eligible for additional loan funds. You must be enrolled at least half-time during the period that the loan is to cover and must be making satisfactory academic progress toward your degree.
What is the interest rate for Federal PLUS Loans?
Currently, the interest rate on Federal PLUS Loan is a variable rate and is adjusted each July but will never be higher than nine percent. The disclosure notice will contain the current interest rate. Note that the interest begins to accumulate on the date of the first loan disbursement.
Federal PLUS loans currently have a fixed interest rate of 8.5%.
How many hours must I be enrolled for my parents to be eligible to borrow a Federal PLUS Loan?
You must be enrolled for at least six credit hours per term for parents to be eligible to borrow under the Federal PLUS Loan program. Since "cost-of-attendance" varies with enrollment status, the amount of Federal PLUS Loan eligibility for your parents will be different if you are enrolled full-time than if you are enrolled part-time.
How are "full-time" and "part-time" defined?
Undergraduate Students |
|
Credit Hours |
Eligibility Status |
|---|---|
0-5 |
parents not eligible for PLUS |
6 - 8 |
eligible at half-time level |
9 - 11 |
eligible at three-quarter time level |
12+ |
eligible at full-time level |
When do my parents begin repaying the Federal PLUS Loan?
Repayment of the Federal PLUS Loan begins on the day after the loan is "fully" disbursed. The first payment will be due within 60 days after the "final" loan disbursement. (Note that interest on the Federal PLUS accumulates from the date of the "first" loan disbursement.) Your parents also have the option of deferring payments until six months after you graduate, leave school or drop below half-time status.
Your parents will pay both principal and the interest that accumulates. During periods of deferment and forbearance (if your parents are eligible), they will not have to pay any principal, but interest will continue to accumulate. This means that their loan principal will increase, unless they choose to pay the interest quarterly during the deferment or forbearance.
Can my parents get a deferment on repayment of the Federal PLUS Loan?
To qualify for a deferment, your parents must meet one of the following conditions:
- be enrolled at least half-time in a program of study that meets the U.S. Department of Education's requirements for program eligibility. (Note: They may not defer repayment while in a medical internship or residency program, except a residency program in dentistry.)
- be enrolled in a graduate fellowship program approved by the U.S. Department of Education.
- be enrolled in a rehabilitation training program for persons with disabilities that is approved by the U.S. Department of Education.
They may also be eligible for deferment for a period of up to three years if they are:
- unemployed and seeking but cannot find full-time employment
- experiencing or will experience economic hardship (talk to your lender or loan servicer for more information on this deferment.)
Additional questions regarding eligibility for deferment of Federal PLUS Loan repayment should be directed to the lender/servicer of the loan(s).
How are Federal PLUS Loans disbursed?
The Federal PLUS Loan will be disbursed in at least two payments and generally will be credited to the student's account. Any leftover funds will be paid to your parents by check or, with their written permission, either left in your account or paid to you. The Federal PLUS Loan Form will provide your parents with the opportunity to designate how refunds are to handled.
What happens if I drop classes or withdraw after my parents have received Federal PLUS loan funds?
If your classes were paid for with funds from a Federal PLUS Loan and during the drop period you reduce the number of credit hours below full-time, any refund due from the reduction in your charges may go to repay your loans. The refund would reduce the corresponding loan debt by the refunded amount with funds first going to unsubsidized and subsidized loans and then to Federal PLUS Loans. You may be required to repay the school all or part of the aid you received.
If your classes were paid for with funds from a Federal PLUS Loan and then you withdraw from all of your classes, a Return to Title IV Funds calculation will be performed to determine what portion of your financial aid was actually earned. The Department of Education would be notified that you have dropped below half-time or have left school and any pending disbursements would be canceled.
What if my parents have prior PLUS Loans under the FFEL program?
Your parents may want to consider a Federal PLUS Consolidation Loan. Consolidation means they make only one monthly payment to cover all their parent loans, including PLUS Loans under the Federal Family Education Loan Program. There may be several advantages for your parents if they consolidate. Because the interest rate is the same under PLUS Loans, they may be able to pay less interest than they are paying on their current loans. They can also get the benefit of choosing a repayment plan that best suits their financial circumstances, and they may be able to reduce their monthly payment.
For more information about Consolidation Loans, contact your student loan lender or check out these on-line resources:
- Consolidation loan information from www.finaid.org
- Consolidation loan information from mapping-your-future.org
Who will the lender be for Federal PLUS Loans?
The lender for the Federal PLUS Loan will be a bank, credit union, or other lending institution that you will choose at the time you do the PLUS Master Promissory Note.