Federal Direct PLUS Loans are available for credit-worthy parents of dependent students, who are U.S. citizens, not in default on a prior student loan and who don’t owe a refund on a federal grant. Should a parent be denied a PLUS loan due to adverse credit history, the federal government will mail a packet outlining the process for obtaining a credit-worthy cosigner. Students whose parents are denied and are unable to obtain a credit-worthy cosigner may qualify for an additional Unsubsidized Stafford Loan ($4000 for freshmen and sophomores; $5000 for juniors and seniors).
The interest rate on a Federal Direct PLUS Loan is fixed at 7.9% and the government will deduct a 4% processing fee from the proceeds so it is important to add these fees “on top of your loan” when applying in order to calculate the actual net proceeds received.
PLUS Loan funds can be applied toward educational expenses including tuition, fees, room, board, books, personal, transportation and the cost of a required laptop computer for freshmen. It cannot be used for non-educational expenses such as buying a car, paying credit card debt, mortgage payments, home improvements, etc. Parents who've applied for loans to pay for indirect educational expenses (laptop computer, off-campus housing, etc.) should expect to receive a refund sometime after the add/drop period has expired once ALL direct educational expenses have been paid.
In order to determine the PLUS loan amount needed simply take your annual balance, divide it by .96 and round up to the nearest dollar to arrive at the gross amount you’ll need to borrow. For example, if you need to pay $10,000 for the year, the amount you will need to borrow is $10,417 ($10,000/.96=$10,417). The government will deduct 4% from this amount ($10,417) and you will receive $10,000 (4% off the top of $10,417=$417 leaving a net amount received of $10,000).
*** ALL BORROWERS SHOULD APPLY FOR THE TOTAL AMOUNT NEEDED FOR THE YEAR ***
For questions regarding credit denials and endorser requirements, borrowers are directed to call the Federal Direct Loan Department at (800) 557-7394. All other inquiries should be directed to the Loan Coordinator in the Office of Financial Aid at Quinnipiac University at (203) 582-8750.