Budget Control Act of 2011 eliminates the Federal Direct Loan subsidy, effective July 1, 2012
The Budget Control Act of 2011, signed into law on Aug. 2, 2011, eliminates the Federal Direct Loan subsidy for graduate and professional students effective July 1, 2012. As a result, summer 2012 is the last term that graduate and professional students may be eligible to receive Federal Direct Subsidized loans, although they will continue to be able to receive unsubsidized loans.
The Act also eliminates the upfront rebate for all Federal Direct Loans. Starting July 1, 2012, Federal Direct Subsidized and Unsubsidized loan disbursements will have a one percent origination fee, and Federal Direct PLUS loans will have a four percent origination fee applied at disbursement.
Parent Loans are available to credit-worthy parents of dependent, undergraduate students and can be processed for up to the cost of attendance less any financial aid the student is receiving. Federal guidelines regulate the primary features of the PLUS Loan program, eligibility for borrowing and repayment terms.
When you apply for a Direct PLUS Loan, the Department will check your credit history. To be eligible for a PLUS Loan, you must not have an adverse credit history. If you are found to have an adverse credit history, you may still borrow a PLUS Loan if you get an endorser who does not have an adverse credit history. An endorser is someone who agrees to repay the Direct PLUS Loan if you do not repay the loan. The endorser may not be the student on whose behalf a parent obtains a Direct PLUS Loan. In some cases, you may also be able to obtain a Direct PLUS Loan if you document to our satisfaction that there are extenuating circumstances related to your adverse credit history.
The Federal Direct Plus Loan Program requires a 3% origination fee and a 1% default fee. The total fee amount is 4% or 96% of the gross loan amount. The U. S. Department of Education deducts the fees before you receive any loan money, so the loan amount you actually receive will be less than the amount you have to repay.
The interest rate for Direct PLUS Loans is a fixed rate of 7.9%. Interest is charged on Direct PLUS Loans during all periods, beginning on the
date of your loan's first disbursement. To find out more information on interest rates for Direct PLUS Loans, contact the Direct Loan Servicing Center at 800-557-7394.
Applying for a Federal Direct Parent Plus Loan
There are 3 steps to applying for the Federal Direct Parent Plus loan. If you are a first time borrower, you must complete all three steps which will take approximately 25-30 minutes. Repeat Direct Plus loan borrowers who have already completed a Federal Direct Master Promissory Note for previous years at SHU only need to complete step 3 by completing a new Plus loan certification form.
Before you begin: Parents who wish to apply for the Plus loan will need their FAFSA PIN* issued by the U. S. Department of Education. If you have lost or forgotten your FAFSA PIN, visit www.pin.ed.gov
***Attention MAC users, you must use "Internet Explorer" or "Firefox" as your browser in order to complete your Master Promissory Note. "Safari" is not compatible with the Dept. of Education's website.***
STEP 1 Complete the Plus Loan Application
**Please note that this step in the process is NOT the Promissory Note, it is an application where you provide information for the Credit Check to be done by the Dept. of Education** Click on the above link "Complete the Plus Loan Application" or go to www.studentloans.gov Once there, sign in with your FAFSA pin and other information, then click on "Start PLUS Application Process". The FAFSA pin for this process must be of the Parent borrower and not the student.
STEP 2: Electronically Sign the Direct PLUS Loan Master Promissory Note (MPN)
This is a separate step from the above mentioned "PLUS Application" This part of the process is collecting your electronic signature on the Promissory Note where you agree to the terms and conditions of the loan.
STEP 3: Complete your Parent Plus Loan Certification form to authorize the dollar amount you wish to borrow. After the borrower has completed this form, please return it to our office so that the loan can be processed.