Federal Direct Parent (PLUS) Loan
The Federal Direct Parent PLUS Loan is available to parents of dependent undergraduate students to assist in covering direct and indirect costs not covered by the financial aid award.
The student must meet federal and institutional eligibility requirements and file a Free Application for Federal Student Aid (FAFSA) in order for a parent to be eligible to borrow a PLUS loan.
The parent must:
- be the biological/adoptive (custodial or non-custodial) parent or step-parent (step-parent must be listed on the fafsa);
- be a U.S. citizen or eligible non-citizen (permanent resident);
- not be in default on repayment of federal aid;
- must not have federal loans in an active discharge status, and consent to, and
- pass a credit check by the U.S. Department of Education.
Your debt-to-income ratio and employment status are not taken into consideration; however, adverse credit typically results in a PLUS loan denial. Additional information about the credit approval process including what is adverse credit, credit appeals and the use of an endorser is available online.
Students are charged tuition, fees, room and meals by term (fall and spring). We strongly encourage you to request a fall/spring loan if your student plans to attend both terms. Funds for a spring term are not disbursed until the fees are due in early January so interest does not accrue on funds that have not been disbursed.
Interest Rates and Loan Fees
The interest rate on loans disbursed between July 1, 2016 and June 30, 2017 is 6.31%. Remember that interest begins to accrue as soon as funds are disbursed. Please note that loans for the 2016-17 academic year cannot be disbursed earlier than 10 days prior to the beginning of the fall term which begins August 24, 2016.
PLUS loans carry a loan fee that is deducted from the gross loan proceeds. The loan fee for PLUS loans with the first disbursement prior to October 1, 2016 is 4.272%. For example, the net proceeds on a $10,000 loan would be $9,572. Due to federal sequestration the loan fee is expected to change after October 1, 2016.
How to Apply
- Step 1 of 2 - The Parent borrower should complete the PLUS loan application at www.studentloans.gov. The parent borrower will need to log in with the FSA ID issued to the parent. If you do not have an FSA ID you can sign up from studentloans.gov. Once logged in 'Apply for a PLUS loan.' Follow the application instructions through to the end and submit. You will receive a decision within a few minutes.
- Step 2 of 2 - Complete PLUS Loan Master Promissory Note (MPN) immediately following loan approval.
- Our office will receive electronic notification of your loan application and completion of the MPN.
How Much Should I Borrow?
You should borrow as little as possible! However, you may borrow up to the amount listed on your student’s award letter. You may also request the maximum available loan during the application process.
Once all requirements are met our office will email you from email@example.com with a final loan amount.
Can I increase or decrease my loan?
Yes, your loan can be increased by submitting a new Parent Loan application at www.studentloans.gov or by contacting our office as long as it does not exceed your loan eligibility. Your loan can also be decreased by contacting our office at firstname.lastname@example.org. You should carefully review the student account statements (available through the parent portal on my.coe.edu if your student has granted access) to determine if you need to adjust your loan amount.
How are loan proceeds paid?
Loan proceeds are applied by the Coe College Office of Financial Aid directly to the student account, provided that all administrative requirements have been met. A loan for two terms will be divided in half. Our office will communicate directly with the parent borrower via the email used on the Parent Loan application that the loan is approved and the final loan amount. Please review this email and contact our office with any questions.
Can I use Parent PLUS Loan funds for non-billed Coe charges such as books and travel expenses?
Yes, you can use the Parent Loan to cover charges that are not billed by the college such as books, travel expenses, study abroad, etc. However you should consider the timing of loan disbursements, any outside scholarships and unearned work study when you are determining if you have borrowed enough Parent PLUS loan to generate a refund. Remember too that the refund will be issued as you requested on the loan application (to the borrower or to the student). The Office of Financial Aid is happy to review the amount you have borrowed against expected charges in order to help you determine if you have borrowed enough to have excess funds. If you will have excess funds we strongly suggest that you complete an ACH Authorization Form so your refund can be deposited directly into your personal bank account. This can be especially important if you are borrowing to cover book costs at the beginning of the semester. The other choice is for the Coe Student Accounts Office to cut a paper check and mail it to the address of the refund recipient.
When do I begin repaying my PLUS Loan?
Repayment of the Parent (PLUS) loan begins within 60 days of the full disbursement of the loan. For a full year loan repayment will generally begin sometime in February. Information about repayment terms and timing will be provided to you by your federal loan servicer. Repayments are made directly to the loan servicer. Borrowers generally have from 10 to 25 years to repay the Parent PLUS Loan. To calculate estimated loan payments, use the Direct Loan Repayment Calculator. Additional information is also available on the Federal Student Aid website under Repayment.
Can I Defer Repayment of my Parent PLUS Loan?
It is possible to delay (defer) loan repayment until after your student is no longer enrolled at least half-time (two course credits). Generally the request for deferment is made at time of application and confirmed with the loan servicer. The parent borrower also has the option to request an additional six month post-enrollment deferment after the student drops below half-time, graduates, or withdraws. Parents must request separate deferments for each loan period through their federal loan servicer. You may make interest payments during deferment periods and there is no penalty for early repayment.
Compare the PLUS loan and private student loans
Many students and families need to borrow additional funds to meet the cost of education. The decision becomes whether to borrow through the Parent Loan or a private student loan program.
Fast facts about Parent Loans vs. Private Student Loans
- Parent Loans have a fixed interest rate (6.31% for the 2016-17 academic year). Private student loans may have a fixed interest rate but most likely have a variable rate that is "capped" well beyond the parent loan rate.
- Parent Loans cannot be transferred to the student's name, however a parent is equally liable for a co-signed private student loan.
- Parent and most private student loans can both be deferred from payment (not from interest accrued) while the student is in school.
- Parent loans require that you pass a credit check. Private alternative loans will require a more thorough credit screening.
- Accrued interest on a Parent loan will capitalize at repayment. Private alternative loans may capitalize interest as often as quarterly.
- Parent loans are federally insured against the death or disability of the parent or student. Private alternative loans may be insured but many are not.
Coe College does not have a recommended lender list for private student loans. In order to find the best loan for your student we suggest the following:
- Contact your bank to see if they offer a private student loan or have suggestions,
- Conduct an internet search on the following terms:
- "Private student loans" + "your state of residence" and/or
- "Private student loans" + "Iowa"
Loans that require "certification" from the college are generally going to offer you better terms and disburse funds directly to the college. Our office is committed to working with whatever financing option best suits your needs.
Additional information about choosing a loan that is right for you is available from the Consumer Financial Protection Bureau.