Office of Student Aid : Loans : Federal Direct Parent PLUS Loan

Please Note: Parents of new students may apply for a summer 2009 Parent PLUS Loan only after their student has attended his/her on-campus FTCAP advising day in May/June 2009.

Parents of dependent undergraduate students can borrow a federal Direct Parent PLUS Loan to help pay for educational expenses at Penn State, as long as their student is enrolled at least half-time (6 credits) in a degree program and meets and maintains the University’s Satisfactory Academic Progress Standards. Penn State participates in the Direct Lending Program, in which parents borrow their federal loan funds only from the U.S. Department of Education rather than private lenders.

Parents may borrow up to the total Estimated Cost of Attendance minus all other sources of financial aid their student receives. The Parent PLUS Loan has a fixed interest rate of 7.90 percent, which is charged on the loan from the time the loan funds are disbursed until it is paid in full.

How do I get a Parent PLUS Loan?

To request a Parent PLUS Loan, parents will need to follow these steps after the 2008-09 Free Application for Federal Student Aid (FAFSA) has been completed:

1. Complete a Friends of Penn State (FPS) Access Account on eLion.
2. Gain access to the PLUS Request Form.
   
   • After you create a FPS Account, provide your student with your FPS User ID. Your student will need to grant you access specifically to the PLUS Request Form by selecting the "Parent/Other Access" option from the "Students" menu on eLion.
     • First-year students will be able to grant their parent access to the PLUS Request Form only after establishing their Penn State Access Account when they visit their campus for the First-Year Testing, Consulting and Advising Program (FTCAP).
3. Complete the PLUS Request Form, available from the "Parents/Other" menu on eLion.
   • As the parent borrower, you will need to complete a PLUS Request Form for each loan period you are requesting a Parent PLUS Loan (i.e. fall only; spring only; or fall/spring combined).
   • By submitting the PLUS Request Form, you also authorize the U.S. Department of Education to conduct a credit check.
   • After submitting the PLUS Request Form, you will receive an immediate message confirming we have received your request.
4. Sign the Direct Loans Master Promissory Note (MPN)—using your federal Student Aid PIN (the same one you use to sign the FAFSA) —online by choosing the "Complete New MPN for Parent PLUS Loans" option. *
• In most cases, the Direct Loan MPN will be valid for up to ten years. Once you sign it, you will not need to do so again for future Parent PLUS loans.
• Technical Difficulty: If you are experiencing technical difficulty signing the MPN online at www.dlenote.ed.gov, please contact the Department of Education's customer service center for borrowers toll free at 800-557-7394.

How much should I borrow?

The yearly limit on a Parent PLUS Loan is equal to your student's cost of attendance (tuition, fees, room and meals, books, transportation, and supplies) minus other financial aid your student receives. We encourage you to review your student’s tuition bill prior to applying for a Parent PLUS Loan to determine the loan amount you will need 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%. Parents need to take this net 2.5% fee into consideration when determining the gross amount to borrow. Please note, if the borrower fails 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.

How do I know if my loan was approved?

After you complete the PLUS Request Form, the U.S. Department of Education will mail you the results of your credit check and transmit this information electronically to the University.

If you pass the credit check and have signed the Parent PLUS Loan MPN, we will include the Parent PLUS Loan in the Student Aid Notification and it will also appear on the tuition bill as a credit to your student's University account. After you confirm your student's registration on the tuition bill every semester, the loan funds may be ready to disburse as early as ten days prior to the start of the semester.

If you don't pass the credit check, you will receive an endorser form (you might still be able to receive a loan if someone, such as a relative or friend who is able to pass the credit check, agrees to endorse your loan). However, if an endorser is not an option for you, our office will automatically review your student's eligibility for an extended federal unsubsidized Stafford Loan and process it on their behalf. For further information regarding the Parent PLUS credit decision, parents can call the Direct Loan Customer Service Center toll-free at 800-557-7394.

What else can you tell me about the Parent PLUS Loan?

Disbursement
If you apply for a Parent PLUS Loan for the academic year, the loan will be disbursed to Penn State in two equal installments—one each at the beginning of fall and spring semesters—and will be applied toward payment of tuition and fees, room and board, and other University charges on your student's tuition bill (eBill).

Refunds
If a credit balance remains after all charges are paid in full, 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
Typically, repayment begins within 30-60 days of the final loan disbursement during the academic year, and parents will have ten years during which to repay the loan.

Deferment
Parents may verbally request a deferment of each new Parent PLUS Loan by contacting the Direct Loan Servicing Center at 800-848-0979, approximately 30 days after their Parent PLUS loan has been fully disbursed. In essence, by requesting a deferment, a parent will not go into repayment until after their student is no longer enrolled in at least a half-time status. Parents may need to provide a copy of their student’s academic verification to the Direct Loan Servicing Center.

Increase or Decrease a Parent PLUS Loan
To increase a Parent PLUS Loan, parents will need to complete the PLUS Request Form on eLion for each loan period a loan is requested.

To decrease a Parent PLUS Loan, please contact the Office of Student Aid by e-mail or by calling (814) 865-6301.

*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.