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Federal Direct PLUS Loan
All federal loans are processed through William D. Ford Federal Direct Loan program. Federal Direct PLUS Loan borrowers will apply for and obtain loan funds directly from the U.S. Department of Education.
Who May Apply
In order to qualify for a Federal Direct PLUS Loan, the parent must be the student's biological or adoptive mother or father. A stepparent whose assets and income are taken into account when determining the student's expected family contribution is also eligible to borrow a Federal Direct PLUS Loan. Parent borrowers must have good credit history to be approved. Students must be dependent, undergraduate students and enrolled at least half-time.
- 2015-2016: 6.84% variable-fixed interest rate, capped at 10.5%
NOTE: There is no grace period for a Federal Direct PLUS Loan. Interest begins to accrue immediately after the first disbursement of the Federal Direct PLUS Loan. Repayment of both principal and interest begins within 60 days after the final disbursement of the loan. The Direct Loan Program offers deferment and forbearance options. Federal Direct PLUS Loan borrowers can contact the Direct Loan Servicing Center at 1-800-848-0979 for information on delaying repayment.
Parent borrowers may borrow up to the cost of attendance minus other financial aid the student has been awarded.
- 4.292% origination fee
NOTE: With the passage of the Budget Control Act, the Federal Direct Loan for with the first disbursement is made on or after October 1, 2014 and before October 1, 2015, the origination fee is 4.292%.
A student must be continuously enrolled for at least six units (half-time enrollment) each term as an undergraduate to receive the loan. If the student drops below half-time at any time during the loan period, s/he will not be eligible for the loan proceeds.
Disbursement of Loan Proceeds
Upon approval, the U.S. Department of Education will send the Federal Direct PLUS Loan funds directly to Santa Clara University through the Electronic Funds Transfer (EFT) process. The funds will be credited to the student's account. All loans are issued in one disbursement per quarter beginning in fall term. The second disbursement will arrive at the beginning of the winter quarter for an academic year loan and the final disbursement will arrive at the beginning of the spring quarter.
How To Apply for a Federal Direct PLUS Loan
- Complete the Free Application for Federal Student Aid (FAFSA).
- Complete the Federal Direct PLUS Loan Application and Master Promissory Note (MPN) online at www.studentloans.gov.
- A FSA ID is required to apply for the Federal Direct PLUS Loan online. If you (parent borrower) have already completed the FAFSA, you already have a FSA ID and you must use this FSA ID to apply for the loan. Do not apply for a new FSA ID.
NOTE: It is the custodial parent that is required to file the FAFSA with the student, regardless of which parent (custodial, non-custodial or step) wishes to obtain the Federal Direct PLUS Loan.
You will receive the results of your credit check immediately during the application process online. The Federal Direct PLUS Loan credit check will be denied if the borrower's (parent) credit report show any of the following:
- is 90 or more days delinquent on any debt as of the date of the credit report, 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 HEA (Higher Education Act) during the five years preceding the date of the credit report
If you are denied a Federal Direct PLUS Loan due to credit issues, you have the following options:
- you (parent borrower) may be approved with an endorser (co-signer)
- you (parent borrower) may appeal the credit decision with the ED's Direct Loan Department
NOTE: The student may qualify for an additional unsubsidized Federal Direct Loan. The student will need to request this additional loan in writing to the Enrollment Service Center along with proof of the Federal Direct PLUS Loan denial.
Utilize an Endorser due to Credit Issues
An endorser is someone who will pass the credit check and who agrees, similar to a co-signer, to repay the Federal Direct PLUS Loan if the borrower is unable to do so.
NOTE: The student cannot serve as an endorser of their parent.
If you choose to obtain an endorser, the endorser should complete the endorser addendum. The endorser will need the PLUS Endorser Code (if a Federal Direct PLUS Loan Request was completed) or Loan Identification Number to connect the endorsement to the denied Federal Direct PLUS Loan.
A Master Promissory Notes (MPN) is used for the Federal Direct PLUS Loan, and allow multiple year borrowing under the same term. However, when an endorser is used, the terms of the MPN used for that loan is specific only to that loan. Therefore, a borrower who has previously received a Federal Direct PLUS Loan without an endorser will need to complete a unique MPN for the endorsed loan. Any additional Federal Direct PLUS Loan will require a new MPN and endorser addendum (though the same endorser can be used).
When the borrower is initially denied and approved through use of a endorser, the borrower will need to complete Federal Direct PLUS Loan counseling requirement before the loan can be disbursed.
Appeal Credit Decision due to Credit Issues
The U.S. Department of Education allows borrowers whose credit was denied the opportunity to document either the following situations:
- Information showing that credit reporting used in the credit denial is incorrect and/or has been corrected.
- Extenuating circumstances exist relating to the adverse credit history of the primary Federal Direct Loan Loan borrower.
Borrowers make a credit appeal by either contacting Applicant Services at 1-800-557-7394 or online and select "Document Extenuating Circumstances".
When the borrower is initially denied and approved through the appeal process, the borrower will need to complete Federal Direct PLUS Loan counseling requirement before the loan can be disbursed.
Parents, when applying for a Federal PLUS Loan, use the chart below as a reference for loan period start and end dates.
Academic Year 2015-2016
|Full Academic Aid Year Loan (Fall 2015, Winter 2016 & Spring 2016)||September 2015 to June 2016|
|Fall Only Loan (Fall 2015)||September 2015 to December 2015|
|Winter Only Loan (Winter 2016)||January 2016 to March 2016|
|Spring Only Loan (Spring 2016)||April 2016 to June 2016|
|Summer Loan (Summer 2016)||June 2016 to August 2016|