The Federal Direct Parent PLUS Loan enables parents of dependent students to receive funds directly from the U.S. Department of Education. As in the case of other Direct Loans, the Department is the lender rather than a bank, and loan proceeds are delivered through UW-Eau Claire. For loans disbursed prior to July 1, 2006 the interest rate is variable and is adjusted each year. It will never exceed 9 percent. For loans disbursed on or after July 1, 2006 and before July 1, 2013 the interest rate is fixed at 7.9%. PLUS loans disbursed between July 1, 2013 and June 30, 2014 the interest rate will be fixed at 6.41%. PLUS loans disbursed for the academic year between July 1, 2014 and June 30, 2015 will be fixed at 7.21%. A 4.288 % origination fee is charged by the federal government on these loans. Like the Unsubsidized William D. Ford Federal Direct Loan, the interest begins to accumulate on the date of the first loan disbursement.
Parents may borrow up to the amount of their child's educational costs (as set by the Financial Aid Office) minus any other financial aid he or she may receive. Financial need is not considered when determining eligibility.
The repayment period begins on the day after the loan is fully disbursed. The first payment will be due within 60 days after the final loan disbursement. The parent borrower is required to pay both principal and the interest that accumulates.
For Parent PLUS loans that are first disbursed on or after July 1, 2008, Parent PLUS loan borrowers have the option of beginning repayment on the Parent PLUS loan either 60 days after the loan is fully disbursed or not until six months after the dependent student on whose behalf the parent borrowed ceases to be enrolled at least a half time basis.
Parent PLUS borrowers can contact their lender to request an in-school deferment for their dependent child. To verify your lender you would need to contact NSLDS (National Student Loan Data System). This change is only for Parent PLUS loans that are first disbursed on or after July 1, 2008. Parents should wait until the first disbursement of the loan occurs before making this call. Accruing interest could either be paid by the parent borrower monthly or quarterly, or be capitalized quarterly.
A dependent student is one who does not meet any of the criteria for an independent student. An independent student, according to federal definition, must meet at least one of the following criteria:
- Are you 24 years of age or older?
- Are you working toward a master’s degree or in a doctorate program?
- As of today, are you married? (Marital status may not be projected)
- Do you have children who receive more than half of their support from you?
- Do you have dependents (other than children or a spouse) who live with you and who receive more than half of their support from you?
- At any time since you turned age 13, were both your parents deceased, were you in foster care or were you a dependent or ward of the court?
- Are you a veteran of the U.S. Armed Forces?
- Are you currently serving on active duty in the U.S. Armed Forces for purposes other than training?
- Are you or were you an emancipated minor as determined by a court in your state of legal residence?
- Are you or were you in legal guardianship as determined by a court in your state of legal residence?
- At any time on or after July 1, 2011, did your high school or school district homeless liaison determine that you were an unaccompanied youth who was homeless?
- At any time on or after July 1, 2011, did the director of an emergency shelter or transitional housing program funded by the U.S. Department of Housing and Urban Development determine that you were an unaccompanied youth who was homeless?
- At any time on or after July 1, 2011, did the director of a runaway or homeless youth basic center or transitional living program determine that you were an unaccompanied youth who was homeless or were self-supporting and at risk of being homeless?
If your child does NOT meet any of these criteria, you may apply for a Direct Parent PLUS Loan for him or her.