Federal Direct PLUS Loans for Parents

Federal Direct PLUS loans are loans parents can obtain to help pay the cost of education for their dependent undergraduate children. Parents with good credit histories are able to borrow up to the cost of education minus the financial aid the student is receiving. The interest rate is 7.9% and begins to accrue as soon as the loan is disbursed to GCC with repayment beginning within 60 days unless a deferment has been requested.

In order to qualify for a Federal Direct PLUS Loan, a person must be the biological or adoptive parent (or, in some cases, the stepparent) of the student for whom the parent is borrowing; the student must be a dependent student (FAFSA defined) who is enrolled at least half-time; the parent cannot have an adverse credit history (a credit check will be done); the parent and student must be U.S. citizens; must not be in default on any federal education loans or owe an overpayment on a federal education grant; and meet other general eligibility requirements for the federal student aid programs.

The applicant needs to complete a Federal Direct PLUS Loan application which includes a Master Promissory Note (MPN) online. The MPN explains the terms and conditions of the loan and is a legally binding agreement to repay the loan to the Department of Education. In most cases, one MPN can be used for loans that are received over multiple academic years. GCC will send the loan application checklist to the applicant upon request. The student also needs to complete the FAFSA. The disbursement of the loan money is normally credited to the student’s account or sent directly to the parent after any direct charges have been deducted. In some cases, with the parent’s written permission, GCC will disburse the PLUS loan money directly to the student. Loan money will be disbursed in two installments.