What is the Federal Direct Parent PLUS Loan?

The Federal Direct PLUS Loan is a federally insured fixed rate loan for parents who have been approved after a credit check is preformed regardless of income or assets. The interest rate for 2017-2018 is 7.00%. The interest rates on new loans are fixed for the life of the loan; however, every July 1, each year’s new loans will have different fixed rates based on the current market rates. In addition to interest, you will also pay a loan origination fee that is a percentage of the principal amount of each PLUS Loan that you receive.

Parents may borrow up to the cost of education minus any other financial aid the student has already received. PLUS Loans are scheduled to go into repayment 60 days after the loan’s final disbursement but the parent borrower can contact the loan servicer to request deferment of payments until six months after the student ceases at least half-time enrollment. Interest will accrue during the time the student is in school; however, payments to interest and/or principal can be paid during that time without penalty.

The Federal Direct Parent PLUS loan is legally in the parent’s name and can never be transferred to their student.

To Apply for Direct Parent PLUS Loan

The parent will complete the PLUS Loan application and sign the PLUS Loan Master Promissory Note. These steps are both completed on studentloans.gov. The parent will sign in with their own Federal Student Aid ID (FSA ID) to complete these steps.

  • The student must complete the FAFSA application online at www.fafsa.gov.
  • Determine the maximum amount needed for an academic year using MSOE PLUS loan calculator
  • Complete the PLUS loan application and Master Promissory Note (MPN) online at studentloans.gov. Parents will need their FSA ID to log in.

To receive an additional Direct Unsubsidized Loan from a PLUS Loan denial

Each school year, parents with poor credit may complete the steps above to apply for the PLUS loan. If denied, students may receive an additional Federal Direct Unsubsidized Loan ($4,000 for freshmen and sophomores and $5,000 for juniors and seniors). MSOE will apply the additional Direct Unsubsidized Loan automatically to the student’s account. If the student does not want the additional amount, the student can contact the MSOE Financial Aid Office via email at finaid@msoe.edu to decline the loan.

Federal Loan Processing Overview

  • The U.S. Department of Education will notify MSOE electronically after parents have completed the PLUS loan application and the MPN.
  •  Parents will receive a disclosure statement from the U.S. Department of Education providing specific information about their loan, including loan amount, fees and the expected disbursement dates.
  • Parents’ direct loans must be accepted and both the PLUS application and MPN are completed to ensure that the loan disbursement will be credited to their student’s bill each quarter. Federal loans will have an origination fee which will be subtracted from the amount requested so the amount reflected on bill will be less than the requested amount.
  • The loan disbursement will be posted to the student account during the 2nd week of each quarter. Once posted to the student account, students and parents will be notified via MSOE email when the PLUS loan funds have been disbursed.
  • Loan applications cannot be processed after the academic year ends or if the student ceases to be enrolled at least half-time.

Alternative Loan Information

Another financing option for MSOE families is an alternative loan. This loan is available to MSOE students but may require a co-signer. To view more information regarding this financing option and to apply, please click on the link below.