Mid-America Christian University

What is the Federal PLUS Loan?

These days, college costs are exceeding what the government can award students as part of financial aid packages. That's why the PLUS Loan has emerged as a cost-effective solution for parents who want to make up the difference.

Parents, step-parents, custodial or non-custodial parents (and co-signers) with secure credit can all obtain a PLUS Loan for a dependent child’s education. This loan is used to supplement student financial aid (Pell Grants, Stafford, Federal Work Study, etc.) already granted in your child’s Award Letter or to cover the full costs of education.

PLUS provides an alternative solution to other lending options. Since PLUS is not based on financial need, income or assets, your child can get a quality education without you having to get a home equity line of credit or obtain high APR private loans. This federally guaranteed loan offers flexible options such as deferment and forbearance, low variable rates (capped at 9%), no-penalty early payoff, and in some cases, tax deductible interest. The PLUS Loan is the most accessible and flexible form of parental aid you can obtain.

Rates are variable, and currently at 6.1%. The rates are adjusted annually by the Federal Government every July 1, and will never exceed 9%.

What are the benefits of a Federal PLUS Loan?

With a PLUS Loan, you can:

• Cover all or part of your child’s cost of education (less financial aid)
• Get a variable rate currently at 6.1% - with a maximum cap of 9%
• Qualify with secure credit alone – no income, collateral or need basis
• Obtain a flexible loan without selling assets or refinancing your home
• Keep your child’s education and household finances separate
• Make payments over a flexible 10 year term
• Pay off your loan early – with no penalties
• Have access to payment deferment and forbearance
• Consolidate 91 days after the final year disbursement
• Get some tax deductions – consult your tax advisor for eligibility
• Apply as a parent, guardian, step-parent, custodial or non-custodial parent
• Distribute costs equally by applying for two loans, if you are divorced or married

How Much Money do I to Request?

We recommend that you use your PLUS Loan as a supplemental form of financial aid. Your child may be eligible for financial aid, and should accept it, if it is awarded. Financial aid is determined based on the results following completion of the FAFSA. Awards will be communicated to your child in his/her Award Letter from the school's financial aid office. The PLUS amount you request should cover the unmet need, Expected Family Contribution (EFC) and 3% origination fee that may apply.

How do I Apply for the Loan?

You can apply for the loan online, request. Once you are approved, you will be notified and funds are sent to the school.

Learn More about Repaying Your Loan

Repayment terms are 10 years, but there is no penalty to pay the loan early. Or you can decide to extend your repayment term by consolidating the loan. The benefits include: longer terms, lower payments, fixed interest rate and new incentive programs.

Learn about Your Deferment and Forbearance Options

You are eligible for a payment deferment under the following circumstances. Please note that these conditions apply to the borrower, not the child or endorser:

Education Related: If you are enrolled at least half-time at an eligible school, pursuing a graduate fellowship program, or engaged in a rehabilitation-training program (provided that the program is approved by the U.S. Department of Education).

Unemployment: If you are unemployed but actively seeking employment (up to three years).

Economic Hardship: determined by a variety of factors including your income status, federal aid receipt or deferment status on other student loans (up to three years).

If you do not meet the above requirements, you may be eligible for forbearance.

Learn about PLUS Loan Cancellation/Discharge

You may cancel your PLUS prior to complete disbursal if your situation meets one of the following situations, and your lender is contacted immediately:

In order to discharge a loan after the circumstances above have passed, your situation must meet one of the requirements below and must be certified by the lender and/or school:

• Parent’s permanent disability or death OR child’s death.
• Parent’s Bankruptcy – cancellation of the loan would be possible only if the court determines repayment a hardship
• School’s Closure or False Certification

PLUS Loans cannot be discharged or cancelled simply because your child did not complete the school term, did not like the school or wasn’t employed after receiving his/her degree. Contact your lender for more information.