Federal Direct PLUS (Parent) Loan
The Direct PLUS (Parent) Loan for Undergraduate Students is a loan created by the federal government to assist parents or stepparents with good credit histories help pay for their dependent student's college costs. Parents may borrow up to the Cost of Attendance (budget) minus other financial aid the student has been awarded. To be eligible, students must be a dependent, undergraduate student enrolled at least half-time and must have an award notice from the Financial Aid & Scholarship Office (FASO). Please do not apply for the PLUS loan prior to your student being awarded.
If your loan is denied due to adverse credit, you will have the opportunity to contact the Direct Loan Servicing Center to pursue a Co-signer or Endorser for the loan. If you decline the option, your student may pursue additional Unsubsidized Stafford funding. The student's eligibility is limited by grade level ($4,000 max for freshman/sophomore; $5000 max for junior/senior.)
Students must be continuously enrolled in at least six units (half-time enrollment) each semester as an undergraduate to receive the loan. If the student drops below half-time enrollment at any time during the loan period, and/or if the student has not received satisfactory grades for the minimum number of units required, he/she may not be eligible for the loan proceeds the subsequent semester.
2013-14 Interest Rate
The Direct Loan interest rates for loans first disbursed between July 1, 2013 and June 30, 2014 are fixed. Under the new interest rate structure, all Direct Loans, except Direct Consolidation loans, will be "variable-fixed," meaning parents would receive a new rate with each new loan, but then that rate would be fixed for the life of the loan. There is also interest rate cap at 10.50% for parent PLUS loan.
The interest rates are calculated using a base 10-year Treasury Note Index of 1.81% plus an add-on amount for each loan program - 4.60% for parent PLUS loan.
Academic Year 2012-2013 and 2013-2014 Interest Rates:
- Fixed 7.9% while in school and during grace-period
- Fixed 7.9% during repayment
Deadline to Submit Application
- Fall only loan: December 6
- Academic year or Spring only loan: May 1
The first payment of principal and interest on a PLUS Loan is due sixty (60) days after the loan has been fully disbursed. Delayed Repayment Option: If requested, repayment can be delayed until six months after your student drops below half-time or graduates. You must request this by contacting the Direct Loan Servicer.
Disbursement of Funds
Disbursement of funds begins the first week of the semester and continues on a weekly basis. Academic year PLUS loans are disbursed to student's account in two equal installments usually at the beginning of each semester. Financial Aid funds are applied towards any current outstanding debt owed to the university (i.e., tuition, fees, etc.). Remaining funds, if any, are refunded to the parent by the Bursar's Office. View the Bursar's Office Refund process for more information.
Direct PLUS (Parent) Loan Application Process
Step 1: Student must have completed FAFSA, submitted requested documents and have a Financial Aid award.
Step 2: Submit Direct PLUS (Parent) loan application to the Financial Aid and Scholarship Office (FASO). Applications can be downloaded by clicking the FORMS link on the FASO home page.
Step 3: Once the Direct PLUS Loan application is received, information is forwarded electronically to the Direct Loan Processor for a credit check approval. FASO will receive an electronic notice of approval or denial from the U.S. Dept. of Education.
Step 4: FASO will electronically certify your loan eligibility and the amount you may borrow based on your student's financial aid award.
Step 5: FASO will send your student a message via my.sjsu.edu that directs the parent on-line to sign the Master Promissory Note (MPN), if required.