PLUS Loan

Regulatory framework
Student loans in the U.S.
Higher Education Act of 1965 U.S. Dept. of Education FAFSA · Cost of attendance
Distribution channels
Federal Direct Student Loan Program Federal Family Education Loan Program
Loan products
Perkins · Stafford PLUS · Consolidation Loans Private student loan

A PLUS Loan is a student loan offered to parents of students enrolled at least half time in eligible programs at participating and eligible post-secondary institutions or graduate and professional students at participating and eligible postsecondary institutions.

Similarities with Stafford and Perkins loans

PLUS loans share some similarities with the Stafford and Perkins loans offered to students.

Offered under Title IV of the Higher Education Act of 1965 (with subsequent amendments) and are therefore backed by the full faith of the United States Government

Can be consolidated through the federal student loan consolidation program

Differences from Stafford and Perkins loans

For Direct PLUS Loans first disbursed before July 1, 2008, the repayment period for a Direct PLUS Loan begins at the time the PLUS loan is fully disbursed, and the first payment is due within 60 days after the final disbursement. However, you may defer repayment while you are enrolled at least half-time. The repayment schedule for Direct PLUS Loans disbursed on or after July 1, 2008 is the same as the schedule for Stafford loans.^[1]
The interest rate is fixed at 7.9% and charged from the date of the first disbursement until the loan is paid in full
When taken by a parent, becomes a commitment by the parent, rather than the student
Can be incurred in amounts that cover up to the entire cost of education (including living expenses), less other financial aid
Offer different repayment plans, though there is no interest rate or accrual relief involved in any of the plans
Eligibility is based on the parents or graduate students in question not having an adverse credit history

Changes as of July 1, 2006

Like the Stafford Loan program, the PLUS program changed to a higher, but fixed rate, structure for loans disbursed after midnight, July 1, 2006. The rate offered through the Direct Loan Program will be 7.9%.

Additionally, the PLUS program was made available for graduate and professional students to borrow to finance their own educations, commonly referred to as the Grad PLUS loan.

Amendments were made to the PLUS Master Promissory Note in an addendum to accommodate the changes in eligibility as well as the new fixed rate structure.

Changes as of July 1, 2008

For PLUS loans made to parents that are first disbursed on or after July 1, 2008, the borrower has the option of beginning repayment on the PLUS loan either 60 days after the loan is fully disbursed or wait until six months after the dependent student on whose behalf the parent borrowed ceases to be enrolled on at least a half-time basis.

References