Office of Student Aid : Graduate Students : Loans : The Federal Direct Graduate PLUS Loan

Federal Direct Graduate PLUS Loan
The Federal Direct Graduate PLUS Loan is a federal loan that graduate students with good credit histories may borrow to help pay their educational expenses if they are enrolled in at least 5 credit hours per semester and are maintaining Penn State’s Satisfactory Academic Progress Standards.

A graduate student may borrow up to the total Cost of Attendance less all other financial aid received by the student. The interest rate is a fixed rate of 7.9% and is charged on the loan from the time the loan funds are disbursed until it is paid in full.

To apply for a Federal Direct Graduate PLUS Loan you need to:

• Apply for a Federal Student Aid PIN, also used to sign the Free Application for Federal Student Aid (FAFSA).
• Complete the 2008-09 Free Application for Federal Student Aid (FAFSA) and answer Loan to Question #26 to request a Federal Direct Stafford Loan, if you have not already done so.
• Complete the Graduate PLUS Request Form on eLion for each loan period a loan is requested.
  • This form collects loan period, requested amount and authorization for a credit check.
  • Results of the credit check are mailed to you and electronically transmitted to the school. If your loan is denied for credit, you will also receive an Endorser Form, which will enable you to obtain a co-signer for the Graduate PLUS Loan.
• Sign the Master Promissory Note (MPN) on the Direct Loan Web site by choosing the Complete New MPN for Student Loans option.
  • This is a one time action step and can be taken before or after the result of the credit check is obtained.
  • The Graduate PLUS Loan will be available to claim as an aid resource on the bill when (1) the credit check is complete and (2) the MPN is signed.
  • You are encouraged to review your tuition bill prior to applying for a Federal Direct Graduate PLUS Loan to determine the loan amount to borrow.
  • By law, the total origination fee is 4.0 %; however, Direct Loans currently offer an up-front rebate of 1.5%. Therefore the actual amount deducted from the gross amount of the loan borrowed is 2.5%. Graduate and professional degree students need to take this net 2.5% fee into consideration when determining the gross amount to borrow. Please note, if you fail to make 12 on-time monthly payments, the up-front rebate will be removed and the Principle Balance Owed will be recalculated with the original 4.0% origination fee.
  • If you prefer to sign a paper MPN, you can request one from the Office of Student Aid. Please note that an electronic MPN usually processes in less than two weeks, while a paper MPN will take three to four weeks to process.
  • If you are experiencing technical difficulty signing the Master Promissory Note online at www.dlenote.ed.gov, please contact the Department of Education's customer service center for borrowers toll free at 800-557-7394.

  Federal Direct Graduate PLUS Loan Processing/Receipt of Funds
  The Direct Loan Processor will notify you and the Office of Student Aid of the result of the credit check. If credit is approved, loan funds will be disbursed no sooner than ten days prior to the start of any semester. The funds will be applied to tuition, fees, and other University charges.

  Increase or Decrease a Graduate PLUS Loan
  To increase a Direct Graduate PLUS Loan, you will need to complete the Federal Direct Graduate PLUS Loan Request Form on eLion for each loan period a loan is requested.
  
  To decrease a Direct Graduate PLUS Loan, please contact the Office of Student Aid by e-mail or by calling (814) 865-6301.

  Refunds
  If a credit balance remains after all charges are paid, the credit (as a check or as a direct deposit to a bank account) will be refunded. To learn more about Penn State's refund policy, please visit the Office of the Bursar Web site.

  Repayment of Federal Direct PLUS Loans
  Repayment is deferred as long as you are enrolled at least half time (5 credits). Once repayment begins, you will have up to ten years to pay off the loan.

  *If you are experiencing technical difficulty signing the Direct Loan MPN online, you may request a paper MPN from our office. Please note: a paper MPN will take four to six weeks to process--more than double the time it takes to process the online MPN--so it is always best to sign the MPN online if possible.