Unlike Stafford or Perkins Loans (where the loan is made to you as a student) Federal PLUS loans are made to your parents. The amount of a Federal PLUS loan cannot exceed your college costs less any other finance you are receiving. So if your college attendance costs are, say, $8,000 and you have $5,000 in other aid, your PLUS loan will be a maximum of $3,000. PLUS loans carry interest and repayments begin 60 days after the loan is paid. There is also a 4-7% loan fee.
Federal PLUS loans are either direct or awarded under the Family Federal Education Loan (FFEL) scheme and they can be used only to help towards the costs of your college education.
How Federal PLUS Loans are awarded
Your parents complete and submit a Federal PLUS loan application. For a direct loan they also sign and submit a promissory note. They will have to undergo a credit assessment. Even if they do not pass the assessment they may still get the loan if they can show exceptional financial need, or a relative will endorse the loan agreement.
Who is eligible for Federal PLUS loans?
The general conditions for Federal Student Aid apply. So you must be a US citizen (or eligible noncitizen) with a valid social security number, a high school diploma, and enrolling on an eligible college program.
The special conditions for Federal PLUS loans
• You must be a dependent student. Broadly this means that you were born after 1st January 1983 and you parents are still your main source of financial support.
• You must be an undergraduate, as graduate students are not generally classed as “dependent” for FSA purposes.
• You must be studying at least half-time at an approved college