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Federal Direct Loan Processing

Important Information Regarding Changes to your PLUS Loan
If after reviewing your costs and resources you or your parent borrower determine you need to make adjustments to the Federal PLUS Loan be aware of the specific process involved to make adjustments. Please note: new applications and/or modifications may require the borrower to undergo another credit check.
 
Federal PLUS Loan Increases
  1. Request a new PLUS loan indicating the additional loan amount you wish to borrow. Example: if you originally secured $10,000 and want an additional $5,000 you should complete a new PLUS request applying for $5,000 as the total loan amount requested. (Note: this option must be used if you previously requested the maximum amount and now wish to borrow additional funds.) OR
  2.  Modify your previously secured PLUS loan by indicating the total loan amount requested that you wish to borrow. Example: if you originally secured $10,000 and want an additional $5,000 you should modify the loan to reflect $15,000 as the total loan amount requested. 

Federal PLUS Loan Decreases

 

In order to secure Federal Loan(s) listed on the award letter, the student and/or parent borrower must meet certain eligibility requirements and complete additional steps before the loan will disburse to the student account. All requirements must be met in order for a student to receive their loan funds. In order to have your Federal Direct Loans disbursed by the first day of classes, all additional steps must be completed and all outstanding documentation submitted to SFS by: 
Student and parent borrowers have different steps that must be completed to secure Federal Direct Loans. Refer to the appropriate sections below to determine what additional requirements are needed to ensure disbursement of your Federal Direct Loan funds.

Federal Direct Stafford Loans

Students must meet all federal financial aid requirements as well as institutional requirements regarding enrollment and academic eligibility.  First-time student borrowers (including new graduate student borrowers) must complete online entrance counseling and a master promissory note (MPN) prior to disbursement.

Online Stafford Entrance Counseling–

Continuing your education is an investment for your future. If you decide to make loans a part of this investment, managing the debt you incur is your responsibility. To ensure that you understand this responsibility and the obligation you are assuming, the Department of Education requires first-time student borrowers to participate in loan counseling to outline your rights and responsibilities as a student loan borrower.  Entrance Counseling for both undergraduate and graduate students can be completed online at StudentLoans.gov. Entrance Counseling must be satisfactorily completed before the first disbursement of any Stafford loan can be made.

Online Master Promissory Note (MPN)–

First time Direct Stafford Loan borrowers must complete a Master Promissory Note (MPN). The MPN can be completed online at StudentLoans.gov. The MPN is a legal document in which you promise to repay your loan(s) and any accrued interest and fees to the Department of Education. It also explains the terms and conditions of your loan(s).  You will receive a disclosure statement that gives you specific information about any loan that the school plans to disburse under your MPN, including the loan amount, fees, and the expected disbursement dates and amounts.

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Federal Direct Parent PLUS Loans

Borrower Eligibility –

Parent borrowers must be the dependent student's biological or adoptive parent or the student's stepparent, if the biological or adoptive parent has remarried at the time of the FAFSA application. For financial aid purposes, a student is considered dependent if he or she is under 24, unmarried, and has no legal dependents at the time the Free Application for Federal Student Aid (FAFSA) is submitted (exceptions are made for veterans, orphans, and other special circumstances). Dependent students must provide parent income information on their FAFSA

Parent PLUS loan borrowers must be U.S. citizens or eligible noncitizens, must not be in default on any federal education loans or owe an overpayment on a federal education grant, and cannot have an adverse credit history (a credit check will be completed).
You can find more information about these requirements in Funding Education Beyond High School: The Guide to Federal Student Aid available at: www.studentaid.ed.gov

Application & Credit Check –

For 2011-12, Parent borrowers may request a Federal Direct Parent PLUS Loan online at Studentloans.gov. Parent borrowers should sign into Studentloans.gov using their personal information; parents should not use their student’s information to sign in. The following information will be needed for sign in:
*If the parent borrower does not have a PIN or needs a duplicate, one can be obtained by visiting the Federal PIN website at www.pin.ed.gov.

Once signed into Studentloans.gov, the parent borrower can click on ‘Request PLUS Loan’ to complete a Federal Direct Parent PLUS Loan Application and receive an immediate credit decision.

Tips for Completing the Application:
All technical issues or questions about the online application should be directed to the Direct Loan Applicant Services Center at 1-800-557-7394.

Additional Unsubsidized Stafford Loan Funds –

If a parent borrower is found to have adverse credit history and does not wish to obtain an endorser, the student will be evaluated for their eligibility to receive additional Direct Unsubsidized Stafford Loan funds.

Online PLUS Master Promissory Note (MPN) Parent –

First-time Direct PLUS Loan parent borrowers must complete a Master Promissory Note (MPN). Parents borrowing Direct PLUS Loans for more than one student will need to complete a separate MPN for each student.

The MPN is a legal document in which you promise to repay your loan(s) and any accrued interest and fees to the Department of Education and explains the terms and conditions of your loan(s).  You'll receive a disclosure statement that gives you specific information about your loan scheduled to disburse under your MPN, including the loan amount and loan fees, and the expected loan disbursement dates and amounts. 

The MPN can be completed electronically online at StudentLoans.gov. Parent borrowers will be required to use their Department of Education issued PIN (not the student’s). If you do not have a PIN, you may request one from the official PIN site. 

PLUS Loan limits, interest rate, loan charges, and repayment–

There are no set borrowing limits for Direct Parent PLUS Loans, but the amount borrowed can not exceed the student’s cost of education minus any other funding sources listed on your financial aid award.

For the 2010-11 and 2011-12 award years the interest rate for Direct Parent PLUS Loans is a fixed rate of 7.9%

Interest is charged on Direct PLUS Loans during all periods, beginning on the date of the loan's first disbursement. To find out more information on interest rates for Direct PLUS Loans, contact the Direct Loan Servicing Center.  In addition to interest, all Parent PLUS borrowers are required to pay a loan origination fee that is a percentage of the principal amount. This fee is deducted before the loan is disbursed to the student’s account. However, the borrower’s interest and repayment amounts will be determined based on the total loan amount before the origination fee. 

Repayment begins 60 days after the loan is fully disbursed. Deferment options are available to postpone repayment until the student graduates or drops below half-time enrollment status. More information on parent loan deferment is available on Studentloans.gov.

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Federal Direct PLUS Loan—Graduate Students

Borrower Eligibility –

Graduate students must meet all federal financial aid requirements as well as institutional requirements regarding enrollment and academic eligibility. 

Application & Credit Check –

For 2011-12, graduate student borrowers may request a Federal Direct Graduate PLUS Loan online at Studentloans.gov. Students should sign into Studentloans.gov using their: 
*If you need a duplicate PIN one can be obtained by visiting the Federal PIN website at www.pin.ed.gov.

Once signed into Studentloans.gov, graduate students can click on ‘Request PLUS Loan’ to complete a Federal Direct Graduate PLUS Loan Application and receive an immediate credit decision.

Tips for Completing the Application:
All technical issues or questions about the online application should be directed to the Direct Loan Applicant Services Center at 1-800-557-7394.

If the student borrower is found to have adverse credit history and does not wish to obtain an endorser, the student’s loan application will be terminated.

Online PLUS Master Promissory Note (MPN) Graduate Students –

First-time Direct Graduate PLUS Loan borrowers must complete a Master Promissory Note (MPN). The MPN is a legal document in which you promise to repay your loan(s) and any accrued interest and fees to the Department of Education and explains the terms and conditions of your loan(s).  You'll receive a disclosure statement that gives you specific information about your loan scheduled to disburse under your MPN, including the loan amount and loan fees, and the expected loan disbursement dates and amounts. 

The MPN can be completed electronically online at Studentloans.gov. Students will be required to use their Department of Education issued PIN. If you do not have a PIN, you may request one from the official PIN site. 

PLUS Loan limits, interest rate, loan charges, and repayment –

There are no set borrowing limits for Direct Graduate PLUS Loans, but the amount borrowed can not exceed your cost of education minus any other funding sources listed on your financial aid award.

For the 2013-14 and 2014-15 award years, the interest rate for Direct Graduate PLUS Loans is a fixed rate of 6.4%.

Interest is charged on Direct Graduate PLUS Loans during all periods, beginning on the date of the loan's first disbursement. To find out more information on interest rates for Direct PLUS Loans, contact the Direct Loan Servicing Center.  In addition to interest, all Graduate PLUS borrowers are required to pay a loan origination fee that is a percentage of the principal amount. This fee is deducted before the loan is disbursed to the student’s account. However, the borrower’s interest and repayment amounts will be determined based on the total loan amount before the origination fee. 

Repayment begins 60 days after the student completes his/her degree program or drops below half-time enrollment status.

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Endorser Option

If the PLUS borrower is found to have an adverse credit history, they may still borrow a PLUS Loan by securing an endorser (cosigner) who does not have an adverse credit history. An endorser is someone who agrees to repay the Direct PLUS Loan if the borrower cannot meet the repayment terms of the loan. Note: the endorser may not be the student on whose behalf a parent borrower obtains a Direct Parent PLUS Loan.

Electronic Endorser Process
SFS encourages all families seeking an endorser to complete the electronic PLUS Endorser process on  studentloans.gov. Endorsers can complete this online process as long as they know the PLUS Application ID (obtained by the borrower) and have a Federal PIN. Endorsers who do not have a PIN can apply for one at the PIN website.

Paper Endorser Process
Alternatively, the borrower may print a paper Endorser Addendum on studentloans.gov and have the endorser complete and submit it to the COD processing center at the following address:
    U.S. Department of Education   
    PO Box 5692               
    Montgomery, AL 36103

The paper endorser process may take up to 4 weeks to process; therefore, SFS encourages borrowers to consider completing the Electronic Endorser Process.

Borrowers who receive notification from studentloans.gov that their endorser has been approved and completed the Paper Endorser Process should contact SFS and ask to speak to an SFS representative about their endorser approved PLUS loan. Our office will need the borrower to provide the following information about their endorser:
Once this information has been provided, please allow up to 14 business days for SFS to process the PLUS loan.

Federal Direct Loan Disbursements

Loan money will be credited to the student’s school account to pay tuition, fees, room, board, and other authorized charges. If the loan disbursement amount exceeds the student's charges, a refund will be issued no later than 14 days of the date the credit was created to the borrower of record.  With authorization, parent refunds may be issued to dependent students.

Borrowers will be notified by CCC and Direct Lending each time a disbursement is made and will be provided information about how to cancel all or part of your disbursement if you find you no longer need the money.  All borrowers have 30 days from the date of disbursement to cancel the loan.  Borrowers should read and keep all correspondence received concerning their loan. 

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