Parent PLUS Loan
Eligibility
First, the student must have a FAFSA on file. Then you may borrow a Parent PLUS loan if:
- You are the parent or stepparent of a dependent student.
- You are not in default on any federal education loans.
- You are a U.S. citizen or eligible non-citizen.
If you are not the custodial parent, you may still borrow a PLUS on the student's behalf.
How to apply
The Parent PLUS application is a two-step process. If you do not complete both steps, the loan will not be processed.
Fall 2013 / Spring 2014
Please note that due to changes in federal loan fees caused by sequestration, the Department of Education is unable to process any PLUS loans for the 2013-14 award year until after July 1st.
- Complete the Loan Application Form (LAF) below using our online process:
- Sign your Parent PLUS Master Promissory Note (MPN) at the StudentLoans.gov website, but do not complete the Parent PLUS application on this website (MSU uses the Loan Application Form linked above in step #1). The MPN will be valid for 10 years provided a PLUS loan is disbursed within 12 months of the MPN signing.
Summer 2013
- Complete the Loan Application Form (LAF) below and fax or mail it to the address on the form:
- Sign your Parent PLUS Master Promissory Note (MPN) at the StudentLoans.gov website, but do not complete the Parent PLUS application on this website (MSU uses the Loan Application Form linked above in step #1). The MPN will be valid for 10 years provided a PLUS loan is disbursed within 12 months of the MPN signing.
When to apply
You should begin the application process 4 to 6 weeks before you need the funds in order to ensure timely processing. Depending on the time of year, it can take several weeks from the time MSU receives the PLUS LAF until the servicer sends notice of acceptance or rejection.
Loan limits
The loan limit for each year is the annual cost of education (the "budget") minus other financial assistance. If your requested amount is too high, it will be reduced to fit within the budget.
Interest rate
Under Direct Loans, the interest rate is a fixed 7.9%. Interest begins to accumulate when the first disbursement is made.
Loan fees
The Parent PLUS loan requires a 3% origination fee and a 1% default fee to be paid at time of disbursement. Therefore the actual amount disbursed will be 96% of the loan amount.
Repayment
The first payment is due within 60 days after each loan is fully disbursed, which generally means that the first payment of a fall/spring loan will be due in February. However, the borrower may choose to defer the first payment until 6 months after the student ceases to be enrolled half time or more.
What occurs during Parent PLUS processing?
- After we receive the LAF, MSU confirms student's eligibilty for a Parent PLUS loan and transmits the application to the PLUS loan servicer.
- The servicer performs a credit check.
- The servicer notifies the parent of acceptance or rejection of the loan.
- If the loan is approved, funds are sent directly to MSU and applied against student's bill.
- Any PLUS funds that exceed MSU charges are given to the student as a refund by the Student Accounts division of the Controller's Office.
Disbursement
Disbursement of Parent PLUS funds depends on when the loan is approved. By law, Parent PLUS funds cannot be disbursed until 10 days prior to the first day of classes in a semester. If that date has passed and the approval process has been completed, MSU will generally disburse the funds within 2 days of approval.
Alternatives if you are not approved
These are some options the family may want to consider:
- Parent may be approved with an endorser (co-signer).
- Student may call the Office of Financial Aid and request "PLUS replacement." This means the student may be able to borrow an additional amount of unsubsidized Stafford Loan.
- Private (alternative) loans may be available.
- You may wish to explore other options such as a home equity loan.
