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 PIN number, also used to sign the Free Application for Federal Student Aid (FAFSA).
• Complete the FAFSA for the appropriate year, answer Loan to Question #26 to request a Federal Direct Stafford Loan.
• Complete the Federal Direct Graduate PLUS Loan Request Form on eLion for each loan period a loan is requested.
  • This form is available May 30th for Fall 2008 and Spring 2009 Graduate PLUS Loans.
  • 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. 
  • 2.5% fees will be deducted from the gross amount of the loan borrowed, so you need to take that into consideration when determining the amount to borrow. By law, the total origination fee is 4%; however, Direct Loans currently offer a 1.5% rebate on this origination fee. If you fail to make 12 on-time monthly payments, a charge for the difference between the 2.5% origination fee and the 4.0% origination fee will be added to the outstanding balance of the loan.
  • 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.

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.

• This form is available May 30th for Fall 2008 and Spring 2009 Graduate PLUS Loans.

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.