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

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?

For assistance with completing the application process for a federal Direct Parent PLUS loan at Penn State, watch this 5-minute Parent PLUS Loan online tutorial for step-by-step instructions.

To request a Parent PLUS Loan, parents will need to follow these steps after they complete the 2009-10 Free Application for Federal Student Aid (FAFSA):

How much should I borrow?

The yearly borrowing limit for 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 percent. However, Direct Loans currently offer an up-front rebate of 1.5 percent. Therefore, the actual amount deducted from the gross amount of the loan borrowed is 2.5 percent. Parents need to take this net 2.5 percent fee into consideration when determining the gross amount they wish to borrow. Please note: if the borrower fails to make twelve on-time monthly payments, the upfront rebate will be removed and the principal balance owed will be re-calculated with the original 4.0 percent origination fee.

How do I know if my Parent PLUS 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 Summary on eLion 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 fall and spring semesters.

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 his or her 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 thirty to sixty days of the final loan disbursement during the academic year. Parents have up to ten years to repay the loan.

Deferment
Parents may request a deferment of each new Parent PLUS Loan by calling the Direct Loan Servicing Center toll-free at 800-848-0979, approximately thirty days after their Parent PLUS loan has been fully disbursed. In essence, by requesting a deferment, parent will commence repayment after their student is no longer enrolled at least half-time (6 credits). 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 request an increase to a Parent PLUS Loan, parents will need to complete the PLUS Request Form on eLion for only the additional new amount requested, for each loan period.

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.