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Frequently Asked Questions - Federal Parent and Graduate/Professional PLUS Loans
A lender denied a parent PLUS loan due to adverse credit. A credit bureau report indicated the parent is currently 120 days past due on their mortgage. Does the parent have any recourse other than securing a creditworthy endorser?
Federal regulations require a lender to obtain a credit report before approving a PLUS loan. An applicant with an adverse credit history, as defined by the US Department of Education (Department), will generally be unable to obtain a loan.Top
Is a student’s legal guardian eligible to receive a PLUS loan on behalf of the student?
No. For the purposes of obtaining a PLUS loan, an eligible parent borrower is a dependent student’s biological or adoptive mother or father. The spouse of a parent who is remarried is also eligible if the spouse’s income and assets would have been taken into account when calculating a dependent student’s expected family contribution.A legal guardian is not considered a parent for Federal Student Aid purposes.
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As a parent PLUS borrower, am I entitled to a grace period before starting repayment of my loan while my dependent child is attending school?
Based on recent federal legislation, for PLUS loans first disbursed on or after July 1,2008, parent borrowers have the option of beginning repayment of the loan either 60 days after the loan is fully disbursed or not until six months after the dependent student ceases to be enrolled on at least a half-time basis. The interest that accrues during the delayed repayment start date may be paid, at the option of the borrower, either monthly or quarterly, or may be capitalized no more frequently than quarterlyTop
Regarding Grad PLUS entrance interview regulations: Does a student who has received prior Grad PLUS loans have to complete an entrance interview if they take another Grad PLUS loan this year?
No. A school must ensure that initial loan counseling is conducted with each graduate or professional student PLUS loan borrower prior to its release of the first disbursement, unless the student has received a prior Federal Plus loan or Direct PLUS loan. (34 CFR 682.604(f)).Top
A dependent undergraduate student was certified for an additional unsubsidized Stafford loan, based on the parent’s denial of a Parent PLUS loan. After both disbursements of the additional unsubsidized loan were delivered to the student, the parent's adverse credit has been corrected, and the parent wished to apply for a Parent PLUS loan for the remaining semester. Is the parent eligible to receive a Parent PLUS loan at this time?
Yes. Since the unsubsidized loan funds have been released to the student, the school is not responsible for recovering and returning those loan funds. However, those loan funds must be included in the Estimated Financial Assistance used in determining eligibility for the Parent PLUS loan.Top
I have been teaching in a Title I school for the past five years. Are my Parent PLUS loans eligible for teacher loan forgiveness?
No. Parent PLUS loans are not eligible under the Teacher Loan Forgiveness Program. The only student loans eligible under the FFELP Teacher Loan Forgiveness Program are Stafford loans – those loans borrowed by the student borrower.Top
Why can’t parents of a graduate student get Parent PLUS loans?
Parent PLUS loans are only available to parents of a dependent student. Graduate students are automatically considered independent; therefore, their parents are ineligible for Parent PLUS loans.Top
When does a lender need to request a credit report for a Parent PLUS MPN borrower?
A lender needs to request a credit report for the initial and subsequent loans the parent borrower is applying for when using the Parent PLUS MPN. If the parent borrower is requesting additional funds for an existing loan period (resulting in a loan amount adjustment, not a new loan), the lender does not need to request a new credit report.Top
Can separate Parent PLUS loans be made to both parents?
Yes, as long as the total of both loans does not exceed the dependent student’s cost of attendance (COA) minus estimated financial assistance (EFA).Top
Who obtains the credit report for Parent PLUS loan applicants – the lender or HESC?
It may be the lender or HESC depending on the lender's process.Top
Is the Parent PLUS loan disbursement for a student who is a first-year, first-time borrower subject to the same 30-day delayed delivery of proceeds?
No. Delayed delivery requirements only apply to Federal Stafford loans.Top
Can a parent receive an in-school deferment while the student is enrolled at least half-time?
A PLUS borrower may postpone payment on any PLUS loans disbursed on or after 7/1/08 until 6 months after the student ceases to be enrolled at least half-time.Top
If a parent is denied a Parent PLUS loan because he has a adverse credit history, must the lender send an adverse action notice to that parent?
If a Parent PLUS borrower’s application is denied, the lender must send notification to the borrower advising him of the denial. The Notice of Adverse Action can be used to comply with this regulation, but is not the only form of notification that a lender may use.Top
Can a certified Parent PLUS application be used to document a dependent student’s eligibility for an in-school deferment?
Yes. A certified Parent PLUS application can be used.Top
A parent had a loan charge-off four years and ten months ago. Does the parent have adverse credit?
The applicant is considered to have adverse credit if he/she had a loan charge-off during the five-year period before the date of the credit report.Top
A father is denied a Parent PLUS loan due to adverse credit. The mother is granted a reduced Parent PLUS loan (less than the maximum eligibility) because of the lender’s own standard of creditworthiness. Can their dependent get an additional unsubsidized Stafford?
Yes, but only if the financial aid officer determines that the mother likely will be precluded by exceptional circumstances from borrowing an additional Parent PLUS loan.Top
How is a multiply disbursed Parent PLUS loan set up in repayment?
Multiply disbursed Parent PLUS loans should be set up with one payment for the entire loan balance – not for each disbursement. Repayment begins 60 days after the loan is fully disbursed.Top
Must the lender set up Parent PLUS loans that have two different interest rates with one repayment schedule?
The HEA states that all like loans should be treated as one, to the extent practicable. Therefore, the lender is not required to combine all payments if it is not possible to do so.Top
When did the provisions for co-payable Parent PLUS loan checks come into effect? Where is the check sent?
Co-payable Parent PLUS loan checks were authorized for loans first disbursed on or after October 1, 1992. The check is sent to the school.Top
Can the parent apply for a Parent PLUS loan before the student is registered?
Yes. The parent can apply for a Parent PLUS loan if the student is enrolled or accepted for enrollment.Top
Does a lender have the authority to grant a Parent PLUS loan to a parent borrower if the borrower has previously filed bankruptcy?
Yes, if the bankruptcy was more than five years before the date of the credit report.Top
Can a parent borrower who is a resident of NYS borrow a Parent PLUS loan for a student attending an out-of-state school who is not a resident?
Yes, because the Parent PLUS borrower is a resident.Top
When are lenders required to send the Repayment Addendum and Disclosure Statement for Parent PLUS loans?
Lenders must disclose the required repayment information at or prior to the beginning of the repayment period. For a Parent PLUS loan disbursed in more than one installment, the repayment period begins on the date of the first disbursement made on the loan.Top
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