Federal PLUS Loans
Federal PLUS Loans are made through the Department of Education. Loans cover the cost of attendance minus any other aid receive, which is reflected in the allowance listed on the financial aid award. Borrowers must apply at studentaid.gov and not have an adverse credit history. Students must also complete the FAFSA to allow a parent to borrow a Federal PLUS Loan. Applications for the upcoming academic year become available in mid-April (e.g. April 2021 for 2021-2022). For complete information on Federal PLUS Loans, visit studentaid.gov.
Federal Direct Parent Loans for Dependent Undergraduate Students (PLUS)
- Log onto Studentaid.gov using the parent borrower's FSA ID and password.
- Once logged in, choose the Apply for a PLUS Loan link. This will start the credit check process for all borrowers and will direct new borrowers to complete a Master Promissory Note (MPN).
- Once Loyola is notified of the approval, the Direct PLUS Loan is certified and added to the financial aid award within 7-10 days.
- If the credit check is not approved, additional information will be provided so your parent can contact the Direct Loan Servicing Center to receive more specific information about the decision.
- PLUS Loan approvals must be received 10 days prior to the end of the term.
For a comparison of the Federal Direct PLUS Loan with other options, see below.
Federal Direct Graduate PLUS Loans (Grad PLUS)
- Log onto Studentaid.gov using your (student) FSA ID and password.
- Once logged in, click on the Apply for a PLUS Loan link. This will start the credit check process for all borrowers and will direct new borrowers to complete a Master Promissory Note (MPN).
- Once Loyola is notified of the approval, the Graduate PLUS Loan is certified and added to the financial aid award within 7-10 days.
- If the credit check is not approved, additional information will be provided so you can contact the Direct Loan Servicing Center to receive more specific information about the decision.
- Graduate PLUS Loan approvals must be received 10 days prior to the end of the term.
Weighing Federal PLUS Loan against other options
If there are educational expenses remaining after all other financial aid has been awarded, loans can be an option to provide the resources necessary to meet those expenses.
As an alternative to borrowing loans or to reduce the amount needed in loans, the Office of the Bursar offers a number of payment plans to families through Loyola’s partner, Installment Plans (iPlans). With a payment plan, you can spread one year’s tuition, fees, and room and board charges, less financial assistance, over a number of months. If you cannot pay the entire amount due for each semester, enroll in a payment plan. For more information about payment plans, visit: LUC.edu/bursar.
Comparisons of Loans
In general, Federal PLUS Loans are less expensive than other types of educational loans, such as alternative loans. There are considerations that many students and families make in deciding between the educational loans, or other loans (such as home equity loans):
- Interest Rates & Terms: Federal loans typically offer a much lower interest rate than alternative student loans. For 2020-2021, the federal rates are 2.75% for Ugrd Stafford loans, 4.3% for Grad Stafford loans, and 5.3% for PLUS loans. There are also many repayment plan options for federal loans to ensure that you can afford your payments.
- Borrower/Responsible Party: If borrowed for a dependent undergraduate student, the parent is responsible for repaying the PLUS loan. In contrast, many alternative loans make the student responsible for repayment. However, those loans often require the parent to cosign the loan, making the parent responsible for repaying should the student fail to make timely payments on the loan.
- Interest Tax Deduction: A taxpayer can deduct up to $2,500 a year in student loan interest even if he or she doesn't itemize since the federal student loan interest deduction reduces the adjusted gross income (AGI). Note: Parents with questions about which option is better from a tax perspective should discuss with a tax professional.
- Availability: Across the country, more than 75% of parent borrowers will qualify for a PLUS loan. The adverse credit history requirement of these loans is not as stringent as the criteria used for private student loans.
- In-School Deferments: Parents often want to be able to defer payments while the student is in school. The Federal PLUS loan program only allows the option for deferment when the student is enrolled at least half-time. There is no penalty for early repayment.
- Borrowing from retirement plans: This is merely a substitute for the money it would have earned from being invested. There are also significant restrictions on borrowing from your retirement plan. If you don't repay the money on time, it can lead to severe tax penalties. Interest paid on the loan is not tax deductible. Generally speaking, borrowing from your retirement plan is one of the worst options available.
If a parent is denied a Federal PLUS loan for credit reasons or is ineligible to apply, the dependent undergraduate student becomes eligible for higher Federal Stafford loan limits (up to $4,000 additional for freshman and sophomore students and up to $5,000 additional for junior and senior students). Complete the Additional Unsubsidized Federal Stafford Loan Appeal form and submit it with additional documentation as it applies.
Note: You are strongly advised to have your additional financing plan—alternative loan, Federal PLUS Loan or payment plan—in place by early-August (for the fall term) or by mid-December (for the spring term).
For more information about your loan options, please contact the Financial Aid Office at 773.508.7704 or firstname.lastname@example.org.