Federal Parent PLUS Loan

Loans are borrowed to cover tuition and educational expenses for undergraduate and graduate programs and must be repaid. 

• Parent PLUS loans enable parents who do not have an adverse credit history to borrow to pay the education expenses of an eligible dependent undergraduate student.

  • This is a loan available to parents of dependent undergraduate students. 

  • Parental ability to borrow includes credit worthiness (credit check) conducted by the lender.

  • Parents may borrow up to the cost of attendance minus all other financial aid (including student loans).

• Minimum Enrollment - Students must be enrolled in 6 or more credits per term for the parents to be eligible for this loan.  

• Interest Rate - 

  • All new Parent PLUS Loans have a fixed interest rate of 8.5%. 

  • Interest is charged on the loan from the date that the first disbursement is made until the loan is paid in full.

• The Parent PLUS Loan application process:

  • The loan amount for which your parent is eligible is listed on your financial aid award notification.  If your parent chooses to borrow, they must confirm the award amounts they wish to borrow and return one signed copy of the notification to the Office of Student Financial Aid.  If your parent chooses to borrow less than the amount listed, they will need to modify the letter to show the lesser amount you wish to borrow.
  • The parent borrower must also complete and return the G8 - Loan Application Request form. (Form G8 can be found on the forms page.)
  • The parent borrower will need to complete a Parent PLUS Master Promissory Note (MPN). Parent PLUS MPN information will be mailed to parents.  Parents who previously completed a Parent PLUS MPN do not need to complete another unless they are changing lenders.  Contact EdFund for more information.

• Parent PLUS Denial - If your parents' application for a Parent PLUS was denied, you may qualify for an additional Unsubsidized Stafford Loan (up to the annual maximum of the Unsubsidized Stafford Loan for an independent student). You must provide the Office of Student Financial Aid with a copy of the Parent PLUS denial letter issued directly from the lending institution. This amount may not equal the amount of the original Parent PLUS.

• Repayment - Parent PLUS loans go into repayment within 60 days of the 2nd disbursement with the 1st disbursement usually in August (for fall term) and the 2nd disbursement usually being in January (for spring term).

Frequently Asked Questions About
Parent PLUS Loans

How do my parents apply?

• At WSU Parent PLUS loan eligibility is listed on the financial aid award notification.  
• See Parent PLUS Loan Application process above.

• The purpose of the federal student loan program is to provide opportunities for students and families to fund higher education on optimal terms.  The list below has been compiled to help Washington State University students and parents negotiate the array of available loan providers and loan products, and to simplify the loan process.  While these lenders have been evaluated closely on the basis of performance, customer service, cost and borrower benefits, borrowers are strongly encouraged to conduct their own consumer research.

• Students and parents have the right to select the lender of their choice and are not required to use lenders on this list. No student or parent borrower will be penalized for choosing a lender not on this list.  

• Washington State University utilizes electronic processes that require participation by lenders.  Lenders on this list have agreed to comply with the methods necessary for timely delivery of student and parent loan funds.  If your lender of choice does not participate in, or is not familiar with, the WSU loan process, the disbursement of the loan funds could be delayed as a result of that lender’s process.

• Please note: Some lenders may have their loans serviced by another entity, which does not alter any borrower benefits associated with that loan, and is not the same as selling the loan. Borrowers are encouraged to research the terms and conditions of a lender before making a selection.

Are there any borrowing requirements my parents have to meet?

• Yes, generally they will have to pass a credit check. 
• If they don't pass, they might still be able to receive a loan if they can demonstrate that extenuating circumstances exist, or if someone they know--who can pass--agrees to endorse the loan and promises to repay it if your parents should fail to do so. 
• Also you must meet the general eligibility requirements for federal student aid and your parents must also meet some of these general requirements. For example, your parents must be citizens or eligible non-citizens and may not be in default or owe a refund to any Federal Student Aid program.

How much can my parents borrow?

• The yearly limit on a Parent PLUS Loan is equal to your cost of attendance minus any other financial aid you receive. For example, if your cost of attendance is $6,000 and you receive $4,000 in other financial aid, your parents could borrow up to--but no more than--$2,000.  
• NOTE: Your school can refuse to certify your parents' loan application, or can certify a loan for an amount less than they would otherwise be eligible for, if the school documents the reason for its action and explains the reason to your parents in writing. The school's decision is final and cannot be appealed to the U.S. Department of Education.

Do they get the money or do I?

• Depending on the lender, the money will either be transmitted and credited to your student account just like the Stafford Loan  or a paper check will be sent to the University.  
• If we are sent a paper check, we will mail the check to your parents for them to use as they need to assist you with educational expenses.  It will then be up to your parent borrower to send to the University any funds needed to pay tuition and fees or room and board. 
• A paper check may also result if the parent borrower modifies the loan application to indicate they wish to receive the funds directly. 

Can my parents cancel their Parent PLUS Loan if they change their minds, even if they've signed the promissory note agreeing to the loan's terms?

• Yes. Your school must notify your parents in writing whenever it credits your account with your Parent PLUS Loan funds. Your parents may cancel all or a portion of their loan if they inform your school that they wish to do so within 14 days after the date that your school sends this notice, or by the first day of the payment period, whichever is later. (Your school can tell you the first day of your payment period.)  
• If your parents receive Parent PLUS Loan funds directly by check, they may refuse the funds by not endorsing the check.
  

What's the interest rate on Parent PLUS Loans?

• The interest rate could change each year of repayment but does not exceed 9 percent. For July 1, 2006 to June 30, 2007, the  interest rate for Parent PLUS Loans interest rate is fixed at 8.5% for the life of the loan. 
• Interest rates are adjusted each year on July 1. 
• Your parents will be notified of interest rate changes throughout the life of their loan. Interest is charged on the loan from the date that the first disbursement is made until the loan is paid in full.

Other than interest, is there a charge to get a Parent PLUS Loan?

• Your parents will pay a fee of up to 4 percent of the loan deducted proportionately from each loan disbursement. (Part of this fee is for insurance used to pay off loan defaults; the rests reduces the cost of the loan to the government.)  
• Because of this deduction, your parents will receive slightly less than the amount they are borrowing.

When do my parents begin repaying a Parent PLUS Loan?

• Generally, repayment must begin within 60 days after the loan is fully disbursed.  
• There is no grace period for these loans. This means that interest begins to accumulate at the time the first disbursement is made. 
• Your parents must begin repaying both principal and interest while you're in school.
  

How do my parents pay back the loan?

Your parents will repay their Parent PLUS loan to the private lender they borrowed from or to a loan servicer.  The Parent PLUS program offers four repayment options they may choose from, but the terms vary slightly.  If your parent does not choose a repayment plan when they first begin repayment, they will be placed under the Standard Repayment Plan.  They can change plans to suit their financial circumstances but may change only once a year.  Aspects of these plans will vary by lender because the individual lenders can tailor the plans.  Check with the lender for complete information.

• The Standard Repayment Plan: 

  • The borrower pays a fixed amount each month--at least $50--for up to 10 years, not including deferment and forbearance periods.  

  • The length of the repayment period depends on the loan amount.
• The Graduated Repayment Plan:  
  • The borrower's payment will be lower at first and then increase, usually every two years.  
  • The length of the repayment period will generally range from 12 to 30 years, depending on the loan amount.  
  • The monthly payment will never increase to more than 1.5 time what the borrower would have paid under the Standard Repayment Plan.  
  • The borrower will repay a higher total amount of interest, though, because the repayment period is longer than under the Standard Repayment Plan.
• The Income Sensitive Repayment Plan:  
  • The borrower's monthly payment is based their yearly income, and loan amounts.  
  • As their income rises or falls, so do the payments.  
  • Each payment must at least equal the interest accrued (accumulated) on the loan between scheduled payments.
• The Extended Repayment Plan:  
  • This plan is only available to borrowers who received their first loan on or after October 7,1998, and who have loans totaling more than $30,000.
  • Under this plan, the payments will be fixed or graduated (lower at first and then increased over time) over a period of up to 25 years.

(For sample repayment information, go to Sample Repayment.)

Are there any tax incentives available for paying back these loans?

• Yes, there are tax incentives for certain higher education expenses, including a deduction for student loan interest for certain borrowers.  This benefit applies to all loans taken out to pay for postsecondary education costs.  The maximum deduction is $2,500 a year.
• IRS Publication 970, Tax Benefits for Higher Education, explains these credits and other tax benefits.  You can find our more at www.irs.gov  or by calling the IRS at 1-800-829-1040.  TTY callers can call 1-800-829-4059.

Is it ever possible to postpone repayment of a Parent PLUS Loan?

• Yes. Under certain circumstances, your parents can receive a deferment or forbearance on their loan as long as it isn't in default. Generally, the same deferment or forbearance provisions that apply to Stafford Loans also apply to Parent PLUS Loans.  
• Since Parent PLUS Loans are unsubsidized, however, your parents will be charged interest during periods of deferment. If they don't pay the interest as it accrues, it will be capitalized.

Can a Parent PLUS Loan be discharged (canceled)?

• Yes, under certain conditions. A discharge releases your parents from all obligations to repay the loan. A complete listing of cancellation provisions is given in the Stafford Loan section.
• Your parents' loan cannot be discharged because you didn't complete your program of study at your school (unless you were unable to complete the program for a valid reason--because the school closed, for example).  Cancellation is also not possible because you didn't like the school or the program of study, or you didn't obtain employment after completing the program of study.
• For more information about loan discharge or repayment, Parent PLUS Loan borrowers should contact the lenders or agencies that hold their loans.
  

(From "The Student Guide" prepared by U.S. Department of Education) 

More information can be found at the following locations:

• Preferred Federal Parent PLUS Loan Lenders  
• Estimating Loan Payments - Remember, the minimum payment is at least $50 per month and the maximum number of payments is initially scheduled for 120 months/10 years.
  • Estimating Your Loan Payment
  • To calculate estimated loan payments (for student or parent loans) you could use the EdWise - Student Loan Calculator. 
  • Sample Repayment charts
• back to Loans - General Overview