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 offer.
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.
If a parent is denied a PLUS loan and opts not to secure an endorser or appeal the credit decision, the student becomes eligible for increased unsubsidized federal Direct Stafford loan limits (add $4,000 for Freshmen and Sophomores; add $5,000 for Juniors and Seniors). Only one parent needs to apply and be denied a PLUS loan. However, if one parent is denied and the other parent applies and is approved for the loan, the student is not eligible for increased Unsubsidized Direct Stafford loan limits.
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, 2020 and June 30, 2021 is 5.30%. Remember that interest begins to accrue as soon as funds are disbursed. Please note that loans for the 2020-21 academic year cannot be disbursed earlier than 10 days prior to the beginning of the fall term which begins August 19, 2020.
PLUS loans carry a loan fee that is deducted from the gross loan proceeds. The loan fee for PLUS loans with the first disbursement after October 1, 2020 is 4.228%. For example, the net proceeds on a $10,000 loan would be $9,577. Due to federal sequestration the loan fee is expected to change after October 1, 2021.
How to Apply
- Step 1 of 2 - The Parent borrower should complete the PLUS loan application at studentaid.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 at studentaid.gov.Once logged in 'Apply for Aid' and 'Apply for a Parent 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 aid offer. 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 contacting our office, but note that we can only increase your loan within the limits of your eligibility. Use the parent portal available on my.coe.edu (if your student has granted you access) to review your student's account statement and 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. We will send an email to the address you provide on the Parent Loan application to let you know 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 However, it is important to account for the timing of the loan disbursement, any outside scholarships, and unearned work study when you are calculating how much you must borrow in order to generate the refund you need. The Office of Financial Aid is happy to help you weigh the amount you plan to borrow against your expected charges to make sure that you borrow enough. Keep in mind the expenses that the refund will cover when you are applying for your loan because you will declare how your refund should be issued within the application. We strongly suggest that you complete an ACH Authorization Form so your refund can be issued by direct deposit. 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 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 Alternative Educational Loan Programs
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 (5.30% for the 2020-21 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.
Our office is not able to recommend a specific lender to you. However, for your convenience we are able to provide you information about historical borrowing trends at Coe College.
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.