Federal Plus Loan
PLUS Loans enable parents with good credit histories to borrow to pay the education expenses of each child who is a dependent undergraduate student enrolled at least half time. PLUS Loans are available through UHEAA's partner lenders.Are there any borrowing requirements that my parents have to meet?
- To be eligible to receive a PLUS Loan, your parents generally will be required to pass a credit check. Most lenders offer a PLUS prescreen option that allows you to determine your eligibility before applying for the loan.
- Your parents might also qualify for a loan even if they don't pass the credit check if they can demonstrate that extenuating circumstances exist.
- You must meet the general eligibility requirements for federal student financial aid. Your parents must also meet some of these general requirements. For example, your parents must meet citizenship requirements and may not be in default or owe a refund to any Student Financial Aid Program.
The yearly limit on a 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.
What is the interest rate on PLUS loans?
The interest rate is fixed at 8.5%. Interest is charged on the loan from the date the first disbursement is made until the loan is paid in full.
Is there any charge for a PLUS loan?
Your parents may pay a fee of up to 4% of the loan. (Utah's student loan guaranty agency, UHEAA, has outstanding borrower benefits to help reduce the cost of a Federal Plus Loan.) This fee is deducted proportionately each time a loan payment is made. For a Federal PLUS Loan, a portion of this fee goes to the federal government to help reduce the cost of the loans. However, some lenders may offer discounts and rebates on these fees. For a Direct PLUS Loan, all of this fee goes to the government to help reduce the cost of the loans.
How do my parents apply for a Federal PLUS Loan?
Your parents must submit a completed PLUS Loan application (available from your school, a lender, or your state guaranty agency) to your school. After the school completes its portion of the application, it must be sent to a lender for evaluation. Because your financial need does not have to be evaluated, it is not necessary for you or your parents to file a FAFSA to apply for this loan unless your school requires it.
How will my parents receive the loan funds?
For a Federal PLUS Loan, the loan funds will be sent to your school by the lender. In most cases, the loan will be disbursed in at least two installments (no installment can be greater than half the loan amount). The funds will first be used to pay for your tuition and fees, room and board, and other school charges. If any loan money remains, your parents will receive the amount as a check or in cash, unless they authorize it to be released to you or to be put in your school account. Any remaining loan money must be used for your education expenses.
When do my parents begin repaying a PLUS loan?
Generally, repayment must begin within 60 days after the final loan disbursement for the academic year. 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.
Is it ever possible to postpone repayment of a PLUS loan?
Yes. Under certain circumstances, your parents can receive a deferment or forbearance on their loan. Generally, the conditions for eligibility and procedures for requesting a deferment or forbearance on a PLUS loan are similar to those that apply to a Stafford Loan. However, since all PLUS Loans are unsubsidized, your parents will be charged interest during periods of deferment or forbearance.
How do my parents pay back the loan?
The lender will arrange a repayment schedule. Generally, the schedule will provide for monthly payments with a minimum of $600 to be paid annually and a maximum repayment period of 10 years (excluding periods of deferment and forbearance).
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