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Federal Direct Parent Loan for Undergraduate Students Federal Direct Parent PLUS Loan applications will be available April 16, 2012 for the 2012-2013 academic year at www.studentloans.gov. The Budget Control Act (BCA) of 2011 (Pub. L. 112-25) was signed into law on August 2, 2011. This Act makes changes to the William D. Ford Direct Loan (Direct Loan) Program. Effective July 1, 2012:the up-front interest rebate that has been provided to Direct Loan borrowers at the time of their loan disbursement will no longer be offered on any Direct Loan Program loan with a first disbursement date that is on or after July 1, 2012. The Federal Direct Parent Loan for Undergraduate Students (PLUS) is a low-interest federally insured loan for parents (as defined by the FAFSA form) of dependent students to help pay college costs. The loan can be used to cover any educational expenses not covered by other forms of financial aid. Under the Federal Direct PLUS loan program parents may borrow up to the full cost of their student's education minus other financial aid received. Eligibility for Parent PLUS Loan To be eligible for a Federal Direct PLUS Loan for Parents, the student and parent must be a U.S. citizen or eligible noncitizen and must not be in default on any federal education loans or owe an overpayment on a federal education grant, complete a FAFSA form, the student must be enrolled or accepted for enrollment in a degree program on at least a half-time basis (6 semester hours) as an undergraduate student, the parent borrower must not have an adverse credit history (a credit check will be perfomed). If the parent does not pass the credit check, the parent may still receive a loan if someone (such as a relative or friend who is able to pass the credit check) agrees to endorse the loan. The endorser promises to repay the loan if the parent fails to do so. If the parent is denied the Federal Direct Parent PLUS Loan and elects not to use an endorser, the student is eligible for the additional Federal Direct Unsubsidized Loan not to exceed the student's Cost of Attendance. Processing fees will be deducted from the total amount borrowed. Borrowing Limits The maximum amount a Parent may borrow per academic year for a Parent PLUS is equal to the cost of attendance minus other financial aid (including Federal Direct Subsidized, Unsubsidized or a Private loan).
Parent PLUS Denials If the parent does not pass the credit check, the parent may still receive a loan if someone (such as a relative or friend who is able to pass the credit check) agrees to endorse the loan. The endorser promises to repay the loan if the parent fails to do so. If the parent is denied the Federal Direct Parent PLUS Loan and elects not to use an endorser, the student is eligible for the additional Federal Direct Unsubsidized Loan not to exceed the student's Cost of Attendance. First and second year students may borrow up to $4,000; third and fourth year students may borrow up to $5,000 additional. The student must sign his/her award letter requesting the additional Federal Direct Unsubsidized Loan.
Applying for a Parent PLUS (FAFSA Required): Step 1: The Parent will complete the Direct PLUS Loan application at www.studentloans.gov. Once on the site, “Sign In” under the “Manage My Direct Loan” located on the left side of the page. You will need your social security number, date of birth and your Federal Student Aid PIN to sign in. To complete the Parent PLUS Loan application, select the link titled “Request a Direct PLUS Loan” and select the link for the “Parent PLUS”. The Department of Education will automatically notify Methodist University of the loan decision. If the borrower requests a paper copy of the MPN be sent for completion, there are more steps involved before the Direct Loan can be approved and disbursed, possibly causing delays in receiving loan funds. Step 2:The Parent will also complete the Federal Direct Parent PLUS Master Promissory Note (MPN) at www.studentloans.gov. Once on the site, “Sign In” under the “Manage My Direct Loan” located on the left side of the page. You will need your social security number, date of birth and your Federal Student Aid PIN to sign in. To complete the MPN, select the link titled “Complete Master Promissory Note” and select the link for the “Parent PLUS”. The Department of Education will automatically notify Methodist University of the loan decision. If the borrower requests a paper copy of the MPN be sent for completion, there are more steps involved before the Direct Loan can be approved and disbursed, possibly causing delays in receiving loan funds. Step 3: Once the Federal Direct Parent PLUS Loan has been approved (informed through the PLUS Application Process), complete the Federal Direct Parent PLUS Loan Request Form (PLRF). The Federal Direct PLUS Loan Request Form must be completed, signed and submitted to Methodist University by the Parent Borrower before the loan will be processed. Please note: When the loan has been processed, you will receive an updated award letter from MU listing the loan as PROCESSED. Once the loan is processed/booked, the loan is assigned a Loan Servicer on behalf of the Department of Education. For a complete listing of Loan Servicers, please visit www.studentloans.gov and choose Loan Serviciers at the bottom right.
Direct Loan Origination Fees Effective July 1, 2012:the up-front interest rebate that has been provided to Direct Loan borrowers at the time of their loan disbursement will no longer be offered on any Direct Loan Program loan with a first disbursement date that is on or after July 1, 2012. Loan Disbursement The Parent PLUS Loan must be issued in two equal amounts, one in the Fall and one in the Spring semester of the academic year as long at the student is enrolled or accepted for enrollment in a degree program on at least a half-time basis (6 semester hours) as an undergraduate student. Repayment Terms Repayment begins within 60 days after the date of the final disbursement. Parent interested in deferring the Parent PLUS Loan must contact the Department of Education Applicant Services at 1-800-848-0979 for a deferment application. THE DEFERMENT PROCESS WILL NEED TO BE COMPLETED ONCE THE FIRST DISBURSEMENT HAS BEEN RECEIVED AT METHODIST UNIVERSITY BEFORE THE PARENT PLUS WILL BE PLACED IN DEFERMENT STATUS. Loan Cancellation/ Reinstatement A student or parent borrower may cancel or reduce a loan anytime before a loan has disbursed to Methodist University. If the loan has already been disbursed and credited to the student’s account in the Business Office, the borrower may cancel a loan within 30 days from the date it disbursed and credited to the student’s Business Office account. A student may reinstate a Federal Direct subsidized (sub) and unsubsidized (unsub) loan at any time prior to the end of the student’s current academic year enrollment. The Federal Parent PLUS for Parents/Graduate students and Alternative Loans MAY NOT be reinstated once reduced or cancelled. Instead, the borrower must reapply online. To reinstate,reduce, or cancel a loan, the borrower must complete the Loan Revision Form. Important Notice: Canceling any loan disbursement could result in a balance to be due on the student's account in the Business Office which the student will be responsible for paying. Repayment after the designated time period Borrowers cannot cancel a loan disbursement if the designated time period described above has already passed. Instead, the borrower can repay the loan disbursement directly by contacting the loan holder which can be found by accessing www.nslds.ed.gov. The borrower will be responsible for any interest that may have accrued and/or any loan fees. National Student Loan Database Borrowers can review Loan (FFELP or Direct), Perkins, and Federal Grant history through secure login to the National Student Loan Database at www.nslds.ed.gov. This site is created to collect information from schools and lenders so that aid can be more efficiently processed. It is a secure site, and only authorized personnel can log on. It is updated every 30-60 days by the schools and lenders, so recent disbursements may not show immediately. OmbudsmanIf a borrower disputes the terms of the loan in writing and the holder of the loan is unable to resolve the dispute, a borrower may seek the assistance of The Federal Student Aid Ombudsman of the Department of Education. The Federal Student Aid Ombudsman will review and attempt to informally resolve dispute and may be reached at 1-877-557-2575 or www.ombudsman.ed.gov. Loan ConsolidationA Direct Consolidation Loan Program is available that allows a borrower to consolidate (combine) one or more of the eligible federal education loans into one loan. For more details and information, go to www.loanconsolidation.ed.gov.
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