Federal Direct Parent Plus Loan
Parents of dependent undergraduate students may borrow from the Direct PLUS loan program. The amount borrowed may be up to the cost of attendance minus any financial aid. The student must meet all other financial aid eligibility requirements, and the parent must meet certain eligibility requirements, such as a favorable credit history, U.S. citizenship, and be in good standing on all Federal Loans. Checks will be mailed directly to the parent after the electronic promissory note is signed. You can complete and sign the electronic Master Promissory Note (eMPN) on- line at https://studentloans.gov/myDirectLoan/index.action. Parents must begin repayment within 60 days of receiving full disbursement of the loan. The interest rate is a variable rate that is capped at 9% and determined on June 1 for the following award year.
For loans first disbursed after July 1, 2013
Direct Subsidized undergrad: 6.8%
Direct Plus loans: 7.90
Parent & Student Eligibility Requirements for a Direct PLUS Loan
- Parent must be the student's biological or adoptive parent, or
- Be the student's stepparent, if the biological or adoptive parent has remarried at the time of application.
- Student must be a dependent of the parent. 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 Free Application for Federal Student Aid (FAFSA) is submitted. See dependency questions on FAFSA.
- Student must be enrolled in and maintain at least half-time at a school that participates in the Direct Loan Program.
- Student must meet & maintain satisfactory academic progress requirements, per SAP policy for financial aid students.
- Parent must have a favorable credit history (a credit check will be completed).
- Both parent & student must be U.S. citizens or be eligible noncitizens.
- Both parent & student must not be in default on any federal education loans and/or owe an overpayment on a federal education grant
Steps to Apply for PLUS
- Student completes a current aid year FAFSA online at www.fafsa.gov
- Parent completes the 4-step PLUS Application process electronically online at www.studentloans.gov which will involve:
- Consenting to a credit check
- Signing an eMPN, requiring your Department of Education-issued PIN (not your child's). If you do not have a PIN, you may request one from the official PIN site
- An eMPN is a legal document in which you promise to repay your loan(s) and any accrued interest and fees to the Department. It also explains the terms and conditions of your loan(s)
- If approved, your PLUS request will be provided to the schools you selected during the application process
- The eMPN is a multi-year document. It will be valid for up to 10 years at San Diego City College and you will not have to complete and sign a new eMPN every year
- Parent will receive a disclosure statement that gives you specific information about any loan that the school plans to disburse under your MPN, including the loan amount and loan fees, and the expected loan disbursement dates and amounts
- Parent will print and complete the Parent Loan Request - PLUS from our website under the FORMS link to your left, and send the completed form directly to the San Diego Mesa College Financial Aid office. The Financial Aid office will notify the Parent directly with the eligibility determination.
- PLUS loans will be disbursed in two disbursements and will be made once the student is actively enrolled in AND attending 6 or more units. NOTE: Late starting classes will delay disbursement of any student loan.
Avoiding Loan Default
You have decided to take out a Federal Direct Subsidized Student Loan. As you probably know, this will have an impact on your future creditworthiness and financial aid eligibility. Please take a moment to review this important information on keeping your loan in good standing. Knowing your obligations will help you avoid stressful situations in the future.
What is default?
Default is the failure to make regularly scheduled payments on a loan. The failure to submit deferment/forbearance paperwork can also lead to loan default.
What is a deferment/forbearance?
Deferment/forbearance is a temporary break from your regular student loan payments. You can request a deferment or forbearance from your lender for reasons of economic hardship, unemployment, temporary disability, and returning to school half-time or more. In the case of a subsidized student loan, a deferment does not accrue interest, whereas you are responsible for paying the interest during periods offorbearance . If you have unsubsidized federal loans from previous institutions, they will always accrue interest. Mesa College does not process unsubsidized federal loans.
Can my loan be forgiven?
Although there are some loan forgiveness programs for teachers (inquire with your lender), the vast majority of borrowers are required to pay their loans in full. The Department of Education does forgive loans in cases of total and permanent disability as certified by a doctor. Please note, loan forgiveness for total and permanent disability is very rare and may prohibit you from receiving federal financial aid in the future. Student loans are rarely forgiven if the borrower declares bankruptcy.
What can happen if I don't make payments
or submit deferment information to my
1. Damage to Your Credit
Federal student loans are reported to the credit bureaus as soon as the funds are disbursed. The loan will continue to be reported monthly until it is paid in full. Although missing one payment on your student loan may not seem like a big deal, it can have a lasting impact on your credit history. Other lenders will look very closely at your student loan repayment as it is likely one of your first major financial obligations. Borrowers have been denied home loans, car loans, insurance, and even employment due to a poor repayment history.
2. Your Debt Becomes Larger
The longer you take to repay your student loan, the more it will eventually cost you. With each missed payment, more interest will have time to accrue. If you consistently fail to make payments on your loan, your lender can chose to send your loan to a collection agency. If this occurs, you will be responsible for paying the outstanding principal of the loan, any accrued interest, and possibly the collection fees associated with your delinquency. Your lender can also take you to court for not paying your student loan. If this occurs, you may be held liable for your lender's legal fees. Another process that may occur is acceleration , meaning that the entire balance (principal, interest, legal fees, and collection costs) will become due at once. If you allow this to happen you lose all eligibility for deferments/forbearances. Ultimately, if you refuse to pay your student loan your lender has the option of garnishing your wages, social security payments, federal tax return, lottery gains, etc.
3. You Are Prevented From Applying For and Renewing Professional Licenses
In some states, including California, borrowers who default on any federal student loans are prevented from applying for and renewing professional licenses, including medical and law licenses. The borrower would not be permitted to receive the license until the default status is cleared.
4. You Cannot Receive Federal Financial Aid
As long as you are in default status, you cannot receive any federal financial aid including Pell Grants, FSEOG Grants, Federal Work Study, and Federal Student Loans. You may also be ineligible for state-awarded financial aid.
How Can I Prevent Student Loan Default?
1. Set up automatic debit for your student loan
Setting up automatic payments will relieve you of having to remember to send payment each month. Arrange for a payment date immediately after you get paid each month to avoid bouncing your payment to your lender. You can arrange for automatic payments for your Mesa College Federal Direct Loan at this website: http://www.dlservicer.ed.gov
2. Keep your address up-to-date with your lender.
Your lender cannot alert you of a problem with your account if they cannot find you. Be sure to notify your lender every time your address or phone number changes. It may also be helpful to provide your lender with your email address. If you are planning to leave the country it is an excellent idea to provide your lender with an alternative way to keep in touch with you, for example by email or by corresponding with a relative. You are responsible for making your payments each month, even if you do not receive a bill.
3. Tell your lender if you cannot afford to make your payment.
Your lender will not know that you cannot afford to make a payment unless you notify them. Your lender will likely be able to offer you a solution that will provide relief from your payments and protect your credit.
4. If you return to school, notify your lender.
If you return to school at least half time you can defer your student loan payments (on loans received after 7/1/1993). However, your lender will not be automatically notified that you have returned to school. You are responsible for notifying your lender. If your student loan goes into default while you are in school, your lender does not have to clear any negative credit reporting associated with your default.
5. Do not avoid your lender.
If your lender is attempting to contact you because you are past due, they are not calling to scold you. Rather, they wish to inform you of the status of your account and possibly to offer you solutions to bring your account current. Avoiding the issue of a past due student loan will not make the problem go away. In fact, avoiding your lender will likely escalate the seriousness of your default. Lenders have several methods of collecting from defaulted borrowers. As the borrower becomes more delinquent, the collection methods become more severe.
6. Plan your borrowing carefully.
Cutting back on your spending now can save you money and stress later. If you budget carefully, you may find that you do not need to take out a student loan. The best way to avoid student loan default is to avoid taking out a loan in the first place. If taking out a loan is unavoidable, borrow as little as possible. If you took out a federal loan after September 1, 1995 while attending San Diego Mesa College , your lender is the U.S. Department of Education. Any Stafford loans received prior to this date will be serviced through various servicers. You will need to contact your lender or guarantor to determine where payments are sent.
- Internet: http://www.dlservicer.ed.gov (On this website you can view your loan account, set up automatic payments, email questions, and request forms.)
- Phone: 1-800-848-0979
- Payments: U.S. Department of Education, Direct Loan Payment Center, P.O. Box 530260, Atlanta , GA 30353-0260