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William D. Ford Federal Direct Loan Program

Federal Direct Parent PLUS Loans are available to parents (legal or adoptive, or stepparent, if their information is required on the FAFSA) of dependent undergraduate students enrolled at least half time at Linfield College. The lender is the U.S. Department of Education (ED) and parents borrow from ED and repay ED. Parents with good credit may borrow Federal Direct Parent PLUS Loan funds to pay the education expenses of their child. Eligible parents are required to pass a credit check, which means the parent does not have adverse credit history. The student must file a Free Application for Federal Student Aid (FAFSA).  Parents and their dependent child must be U.S. citizens or eligible noncitizens, must not be in default on any federal education loans or owe an overpayment on a federal education grant, and must meet other general eligibility requirements for the Federal Student Aid programs. You can find more information about these requirements in Funding Education Beyond High School: The Guide to Federal Student Aid. Scroll down for information on the application process, interest rates, loan fees, repayment options and in-school deferments of repayment. More information can be found at www.studentloans.gov.

A loan is money you borrow and must pay back with interest, be sure you understand your options and responsibilities.

Process for applying and receiving a Federal Direct Parent PLUS Loan at Linfield: 

  • Submit a FAFSA for your dependent student at www.fafsa.gov, students and parents may obtain their federal PIN to sign the FAFSA electronically at www.pin.ed.gov
  • Complete and submit the Parent PLUS Loan Request Form, available under “Financial Aid Forms” must be completed and submitted to the Office of Financial Aid at Linfield College in order to process this loan
  • Contact the Office of Financial Aid to learn about the maximum you may borrow on behalf of your dependent student. The annual Parent PLUS Loan eligibility is calculated by subtracting all financial aid from the cost of attendance, the difference is the maximum the parent can request.  E-mail:  finaid@linfield.edu or Toll Free: 1-888-471-2225
  • Upon receipt of the Parent PLUS Loan Request Form the Office of Financial Aid will complete the credit check process on the federal website:
    • Upon approval, the parent will need to complete the Application and  Master Promissory Note (MPN) at www.studentloans.gov, parents may electronically sign their MPN with their federal PIN, www.pin.ed.gov.  The Office of Financial Aid will prepare the loan funds for disbursement to the student’s account
    • If the credit check result is declined, due to the presence of adverse credit history, the parent has several options, such as challenging the credit report, obtaining an endorser/co-borrower, do nothing or notify the Office of Financial Aid that you will not be pursuing any of these options and would like your dependent student to be eligible to borrow the additional Unsubsidized Federal Direct Unsubsidized Stafford Loan

Interest Rate

A “variable-fixed” interest rate of 6.41% is charged on the loan from the date the first disbursement is made until the loan is paid in full. 

On August 9, 2013 President Obama signed into a law a market-based student loan bill where the loan interest rate is “variable-fixed” rate based upon the 10-year Treasury bill plus a 4.6% add on.  Each July 1, the variable-fixed rate is set.  The new rate is set with each new loan, but then that rate would be fixed for the life of the loan.  The interest rate cap is 10.5% for Federal Direct PLUS loans. Parents do not have to re-complete their Master Promissory Notes, if already completed for 2013-2014, as this will be tracked on the back end of the loan process by their federal servicer.

Fee

Federal Direct Parent PLUS Loans are subject to loan fees.  Loan fees are set by the federal government and the amounts vary depending on when the loan was disbursed.  Parents will pay an origination fee of 4%*. This fee is subtracted from the requested loan amount at the time of disbursement.

*Beginning March 1, 2013 for any loans first disbursed on or after March 1, 2013 the Loan Fee is 4.204% due to Sequestration Year 1.
*Beginning December 1, 2013 for any loans first disbursed on or after December 1, 2013 the Loan Fee is 4.288% due to Sequestration Year 2.

Repayment

Repayment will begin within 45-60 days after the final loan disbursement for the academic year. There is no grace period for these loans. Interest begins to accrue at the time the first disbursement is made. Parents have two repayment options while the student is enrolled at least half time in a four-year undergraduate degree program:

  • Full principle and interest payments for 10 years
  • Deferred payment during your four year undergraduate program. Interest will accrue during this period.

Contact the Direct Loan Servicer for making arrangements for in-school deferment, or visit www.studentloans.gov.

Parents will be automatically placed in the Standard Repayment Plan upon beginning repayment, unless they choose to request a different plan, such as Extended, Graduated or other option per eligibility determine with the Direct Loan Servicer. Contact the Direct Loan Servicer to choose a different plan, discuss trouble with repayment or consolidation.  With the Standard Repayment Plan, parents will pay a fixed amount each month until their loans are paid in full. The monthly payments will be at least $50, and they will have up to 10 years to repay their loans.  It is important to repay the Federal Direct Parent PLUS Loans, failure to repay them results in default and has serious consequences.  Parents should track their loan history, and can do so by accessing the National Student Loan Data Systemto retrieve their loan information. This website will allow parents to see all of their federal aid that they have received from all schools they have attended, as a student and as a parent borrower. Parents will need their federal PIN to access this site, www.pin.ed.gov.

The parent’s monthly payment under the Standard Repayment Plan may be higher than it would be under the other plans because their loans will be repaid in the shortest time. For that reason, having a 10-year limit on repayment, parents may pay the least interest.

To calculate estimated loan payments, go to the Standard Repayment Plan calculator.

Using the calculator above, with an interest rate of 6.41% and total Stafford debt of $32,000 an example repayment schedule would be:

Calculator results:

Interest Rate:

6.41 %

Loan Amount:

$ 32,000

 

Repayment Plan

Term
(in Months) 

Initial Monthly
Payments

Total Payments
(Interest+Principal) 

Detail

Standard

120

$ 361.89

$ 43,426.79

 

Extended:
       Fixed
       Graduated


300
300


$ 214.27
$ 170.93


$ 64,281.04
$ 69,775.30

 

Graduated
(see Note 1 below) 

120

$ 207.86

$ 46,532.73

 

 

Note 1: This is an estimated monthly repayment amount for the first two years of the term and total loan payment. The monthly repayment amount will generally increase every two years, based on the gradation factor in the graduated repayment rules.

Frequently Asked Questions

What is a Federal Direct Parent PLUS Loan? The Federal Direct PLUS Loan for parents allows parents with good credit to borrow to pay the education expenses of each child who is a dependent undergraduate student enrolled at least half time. To be eligible to receive a PLUS Loan, parents are required to pass a credit check, which means the parent does not have adverse credit history.

What is considered adverse credit history? An applicant has an adverse credit history if on the date of the credit report, the applicant is 90 or more days delinquent on any debt, or has been the subject of a default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off of a debt under title IV of the Act during the five years preceding the date of the credit report.

What happens if I do not pass the credit check? If you, the parent, do no pass the credit check, you may pursue the Parent PLUS Loan by contacting the Direct Loan Servicer at 1-800-557-7394 to challenge the credit check, provide additional documentation or have an endorser sign for the loan with you. If you decide not to pursue the PLUS Loan after a notification of denial from the Direct Loan Servicer, the student will be eligible for a Federal Direct Additional Unsubsidized Stafford Loan.

Who is considered a parent? To borrow a PLUS loan for a student, the parent must be the student’s biological or adoptive mother or father.  The total PLUS loan amount borrowed by one parent or borrowed separately by more than one parent (including non-custodial parent) may not exceed the student’s estimated cost of attendance minus other financial aid awarded for the period of enrollment.  A stepparent is also eligible to borrow a PLUS loan if their income and assets would be taken into account when calculating the dependent student’s Expected Family Contribution (EFC).  A separate PLUS MPN is required for each dependent student or if both parents want to borrow individually on behalf of the same student.  Legal guardians and grandparents are not eligible to apply for the PLUS loan.

How much can I borrow? The yearly limit on a Federal Direct Parent PLUS Loan is equal to cost of attendance minus any other financial aid. For example, if cost of attendance is $40,000 and the student receives $25,000 in other financial aid, parents could borrow up to--but no more than--$15,000.

Can I borrow more Parent PLUS Loan funds to cover Jan Term for my dependent student? After your student has registered for Jan Term, you may submit an additional Parent PLUS Loan Request Form to the Office of Financial Aid at Linfield College in order to process this additional loan. The Office of Financial Aid will increase your students cost of attendance based on the number of credits the student is enrolled in for Jan term, and subtract all financial aid to determine the additional amount you may be eligible to borrow for Jan term. The loan funds will be prepared for spring semester, and disbursements do not occur until the beginning of spring semester. Contact Student Accounts/Cashier toll free at 888-777-0008 to discuss payment arrangements.

What does the loan cost? The interest rate is a variable-fixed rate of 6.41% for 2013-2014, and capped at 10.5%. Interest is charged on the loan from the date the first disbursement is made until the loan is paid in full. In addition, parents will pay an origination fee of 4.204% for 4.288% depending on the date of disbursement. This fee is subtracted from the requested loan amount at the time of disbursement.

How do I apply for the Parent PLUS Loan? Complete the FAFSA, www.fafsa.gov for your student. Complete and return the PLUS Loan Request Form to the Office of Financial Aid and complete a PLUS Loan Master Promissory Note (MPN). Links for each are below:

When do I apply for this loan? You may submit the Parent PLUS Loan Request Form to the Office of Financial Aid at Linfield anytime during the academic year, until your student ceases attendance. Parent PLUS loan requests must be processed before the last date of your student’s enrollment for this period.

How do I track my loans? Access the U.S Department of Education’s National Student Loan Data System (NSLDS) under "Financial Aid Review" to retrieve your loan information. This website will allow you to see all your federal aid that you have received as a student from all schools you have attended and/or federal loans you have borrowed as a parent. You will need your federal PIN to access this site, www.pin.ed.gov.

How do I determine my Direct Loan Servicer? You may call 1-800 4 FED AID (1-800-433-3243) to inquire about who your Direct Loan Servicer is, or you can access the U.S Department of Education’s National Student Loan Data System (NSLDS) under "Financial Aid Review" to retrieve your loan information. Paper work mailed to you from the U.S. Department of Education, such as disclosure statements, should list your Direct Loan Servicer contact information.

Terms and Conditions

Terms and conditions of the Federal Direct Parent PLUS Loan are located with the Master Promissory Note, which parents are encouraged to read and sign online at www.studentloans.gov.  View a sample PDF of the Federal Direct PLUS Loan Application and Master Promissory Note (MPN), which includes borrower rights and responsibilities as well as the terms and conditions. Per the Office of Management and Budget (OMB) the expiration date on the Direct PLUS Loan Application and Master Promissory Note (MPN) has expired, and Federal Student Aid is currently in the process of clearing a revised form, but does not have a targeted implementation date.  In the meantime, the current MPN form is valid and schools will continue to use it until further notice.

Default

Default (failing to repay your loan) is defined in detail in the Terms and Conditions section of the MPN.  Serious consequences occur if you default:

  • The United States Department of Education (ED) will require you to immediately repay the entire unpaid amount of your loan
  • ED may sue you, take all or part of your federal and state tax refunds and other federal or state payments, and/or garnish your wages so that your employer is required to send ED part of your salary to pay off your loan
  • ED will require you to pay reasonable collection fees and costs, plus court costs and attorney fees
  • ED will report your default to national consumer reporting agencies
  • You may be denied a professional license
  • You will lose eligibility for other federal student aid and assistance under most federal benefit programs
  • You will lose eligibility for loan deferments