Office of Student Aid : Loans : Summer 2008 Federal Direct Parent PLUS Loan

A Federal Direct Parent PLUS Loan is a loan for parents of a dependent student. To apply for a Federal Direct Parent PLUS Loan, the parent borrower may follow the appropriate steps listed below.

Federal Direct Parent PLUS Loan Application Process
To obtain the Federal Direct Parent PLUS Loan, a parent will need to complete the items below:

• 2007-08 Free Application for Federal Student Aid (FAFSA)
• Federal Direct Parent PLUS Loan Request Form
  • The Federal Direct Parent PLUS Loan Request Form will need to be completed for each new loan term during which a loan is requested. For fall 2008 and beyond, parents will need to use their "Friends of Penn State Account Access" in order to process this request form via eLion electronically.
• Federal Direct Parent PLUS Loan Master Promissory Note (MPN)
  • Once you sign a Federal Direct Parent PLUS MPN, you will not need to sign another one for the same student. This form authorizes the disbursement of future PLUS funds for up to ten years. Parents have the option to sign the MPN either before or after the result of the credit check is obtained.
  • To complete the MPN online, you will be required to sign this document electronically using your Department of Education (FAFSA) PIN. To request a PIN, please go to the Federal Student Aid PIN Web site.
  • 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 about two weeks, while a paper MPN will take three to four weeks to process.

Please note:

• This loan is subject to credit analysis of the parent borrower. If the parent's credit is preapproved, the parent borrower will need to sign a Federal Parent PLUS Loan Master Promissory Note. If the analysis reveals adverse credit, the Office of Student Aid will automatically review the student's eligibility for an extended unsubsidized Federal Stafford Loan. Or parents who are denied can still borrow this loan with a credit worthy co-signer and will automatically be mailed Parent PLUS Endorser information.
• Parents may borrow up to the amount of the student's cost of education, which refers to the Cost of Attendance, minus any other financial aid.
• The Federal Direct Parent PLUS Loan will be available to claim as an aid resource on the tuition bill when 1) the credit check is complete and 2) the MPN is signed.
• Parents are encouraged to review their student's tuition bill prior to applying for a Federal Direct Parent PLUS Loan to determine the amount of loan to borrow.
• The net origination fee of 2.5% is deducted proportionately from each loan disbursement. 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.
• The Federal Direct Parent PLUS Loan interest rate is fixed at 7.9%.
• PLUS Loan funds for summer are generally disbursed at the point a student begins all summer classes.
• 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, go to the Office of the Bursar Web site.
• Repayment of a Direct Parent PLUS Loan begins 30 days after the full amount borrowed for summer has been disbursed. Once repayment begins, you will have up to ten years to repay the loan.
• To determine your monthly payment amount, refer to the Federal Repayment Calculator.

• To increase a Direct Parent PLUS Loan, parents will need to complete an additional Federal Direct Parent PLUS Loan Request Form.
• To decrease a Direct Parent PLUS Loan, please contact the Office of Student Aid by e-mailing us or by calling (814) 865-6301.

Postpone Repayment on a Federal Direct Parent PLUS Loan
Parents can defer repayment of the Federal Direct Parent PLUS Loan for up to one year by applying for a General Forbearance, and can re-apply for this provision annually while their student is enrolled at least half-time as an undergraduate. To apply electronically, parents can complete the electronic General Forbearance Form, then select the Submit Online – Paperless option or contact the U.S. Department of Education's processing center at 1-800-848-0979 directly. To qualify, parents need to state verbally or in writing that they are financially unable to make the monthly payments. Parents cannot apply for this forbearance until the loan has fully disbursed and prior to repayment commencing. If parents choose the forbearance provision, we recommend paying the interest while the student is in school to lessen the amount that will ultimately have to be repaid.