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Frequently Asked Questions-Federal Direct Plus Loans

Who is eligible to borrow a Federal Direct PLUS Loan?
How is the eligibility to borrow a PLUS loan determined?
How much should be borrowed?
What is the maximum PLUS Loan amount that can be borrowed?
What is the interest rate on the PLUS loan?
What is an origination fee?
When will the loan disburse?
What if the loan exceeds the student's tuition and fees?
What if the student adds or drops classes?
When does the PLUS loan go into repayment?
How do Direct Loans and FFELP loans differ?
What happens to the loans that were previously borrowed through a lender in the FFELP program?
What if the student was at another school in the fall and the parent borrower received a PLUS loan at that school?
What if the student is transferring to another school in the spring?
Does the parent borrower have to request a PLUS loan each year?

Who is eligible to borrow a Federal Direct PLUS loan?

A "parent" must be the student's biological or adoptive parent or the student's stepparent, if the biological or adoptive parent has remarried at the time of the loan request.  Your child must be a dependent student who is enrolled at least half-time (six credits). For financial aid purposes, a student is considered "dependent" if he or she is under 24, unmarried, and has no legal dependents at the time the FAFSA is submitted. (Exceptions are made for veterans, wards of the court, and other special circumstances.)

Parent PLUS loan borrowers cannot have an adverse credit history (a credit check will be done). In addition, parents and their dependent child must be U.S. citizens or eligible noncitizens, must not be in default on any federal education loans or owe overpayment on a federal education grant, and must meet other general eligibility requirements for the Federal Student Aid programs.

How is the eligibility to borrow a PLUS loan determined?

The U.S. Department of Education's Direct Loan Servicing Center will conduct a credit check on the parent borrower before approving the loan. If the loan is denied because of an adverse credit history, the Direct Loan Servicing Center will notify the parent. The Department will check the parent borrower's credit history each time a Direct PLUS Loan is requested. If the parent borrower has adverse credit history, they may still  be able borrow a Direct PLUS Loan if they  (1) document to the Department's satisfaction that there are extenuating circumstances, or (2) obtain an endorser who does not have an adverse credit history. An endorser is someone who agrees to repay the Direct PLUS loan if the borrower does not repay the loan. The endorser of a Direct PLUS Loan may not be the student for whom the parent borrower is borrowing the loan. Additionally if a parent is denied, a dependent student can complete the request to borrow an additional Federal Direct Unsubsidized Student Loan.

How much should be borrowed?

A parent loan requires a serious, long-term commitment and must be repaid.  Therefore, it is important to borrow only what the borrower can reasonably afford to repay. Steps to determining the amount to borrow include looking at HCC costs as well as considering the total amount of financial aid the student is expecting to receive. Current debt and future borrowing needs should also be considered. For more information about how much to borrow, click here.

What is the maximum PLUS Loan that can be borrow?

There are no set limits for Direct PLUS Loans, but the amount borrowed may not be more than the cost of the dependent student's education minus any other financial aid received, such as a Direct Subsidized or Unsubsidized Loan. The school will determine the actual amount that can be borrowed.

What is the interest rate on the PLUS loan?

Interest is the expense of borrowing money that is calculated as a percentage of the amount borrowed. Interest is charged on Direct PLUS loans during all periods, beginning on the date of the loan's first disbursement. 

What is the origination fee?

An origination fee is a fee paid by the borrower to the Department of Education to cover administrative fees for the loan. The loan amount credited to the student account will be the principle amount borrowed minus the current origination fee. 

When will the PLUS loan disburse?

Each loan disbursement will be made at least five weeks after the semester start date or two weeks after certification of the loan, whichever is later. The student will continue to receive a bill from the college until the loan is disbursed in full and any remaining balance owed to the college is paid. These dates are estimated and may change if additional information is received from the Department of Education. If the student is enrolled in a late starting or fast track class, the loan disbursement and any refund amount due may be delayed. The loan disbursement will arrive directly at the college via Electronic Funds Transfer (EFT) unless you request paper check delivery.

What if the loan exceeds the student's tuition and fees?

The loan disbursement will be credited to the student's account. If the account results in a credit balance, a refund check will be sent to the parent borrower using the address that HCC has on file.

What if the student adds or drops classes?

The calculation to determine your eligibility is based on the enrollment status of the student at the time the loan request is submitted. Financial Aid Services must adjust the loan if the student receives additional awards or if the student makes any adjustments to their enrollment (including dropping, adding, withdrawing, and non-attendance). The student must be actively enrolled at least half-time (enrolled and attending six credits or more aid eligible credits) to receive a loan. If it is determined that the student is below six aid eligible credits at the time of disbursement, the loan funds will be returned to the Department of Education for cancellation.

Additionally, if faculty documentation indicates that the student was not actively enrolled for six credits (including unofficial withdrawals as reported at the end of the semester) at the time of the loan disbursement, the student will be responsible to repay any ineligible loan proceeds the were disbursed.

When does the PLUS loan go into repayment?

The repayment period for each Direct PLUS loan begins on the date of the final disbursement for that loan. Unless the borrower receives a deferment or forbearance, the first payment on each loan will be due within 60 days of the final disbursement of that loan. The Direct Loan Servicing Center will notify the borrower of the date the first payment is due.

You must make payments on your loan even if you do not receive a bill or repayment notice. Billing information is sent to you as a convenience, and you are obligated to make payments even if you do not receive any notice. In addition, you may be eligible for an "in-school deferment" while your student is enrolled in school at least half-time. For more information on repayment, click here.

To ensure that payments are made on time, you may want to consider paying your loan through the Department's Electronic Debit Account (EDA) repayment option. Under EDA, your bank automatically deducts your monthly Direct Loan payment from your checking or savings account. Your payments will be forwarded to the Direct Loan Servicing Center and will always be on time.

 How do Direct Loans and FFELP loans differ?

The main difference between the two types of loans is where the funds come from. The lender for Direct Loans is the U.S. Department of Education (the Department) rather than a bank or other financial institution. No loans are currently being made under the FFELP program.

What happens to the loans that were previously borrowed through a lender in the FFELP program?

Once the borrower goes into repayment, they may make individual payments to each lender or they can consolidate all their loans with the Department of Education. For more information on loan consolidation, click here. Go to to view your current servicers for Direct and FFELP loans.

What if the student was at another school in the fall and the borrower received a PLUS loan at that school?

If the student received a PLUS loan from another school in the fall, they will need to contact the prior school and request that the school cancel any remaining loan disbursements. The student must add HCC's school code to the FAFSA. Parents must request a PLUS loan at HCC.

What if the student is transferring to another school in the spring?

If the student is transferring to another school during the academic year, the loan is not transferred to the new school.  The student will need to cancel all remaining loans at HCC and request a loan at the new school. Students should contact the new school as soon as possible to determine what the new school requires.

Does the parent borrower have to request a PLUS loan each year?

Yes, each academic year, the student must request a loan by completing the required "Request a  Federal PLUS Loan" steps.

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