Student Loan Facts & Figures

Federal PLUS Loan (Parent or Graduate/Professional Loan)

The Federal PLUS Loan Program provides loans to parents or stepparents of eligible dependent students or to graduate/professional students who need additional financial assistance in meeting postsecondary educational expenses. Eligibility is not based on income. This program is intended to supplement the Federal Stafford Loan Program.

Parent Eligibility Criteria

To be eligible for a Federal PLUS Loan, you must:

• Be the natural parent, adoptive parent, or stepparent (if income and assets were used in need analysis determination) of a "dependent student" as determined by the school.
• Be a citizen, permanent resident, or eligible noncitizen of the United States and verify your Social Security number and immigration status.
• Not be in default or owe a refund on any educational grant or loan.
• Not be determined to have an adverse credit history, as defined by federal regulations.

Student Eligibility Criteria

To be an eligible student with the parent as the borrower, the student must:

• Be determined by the school to be a "dependent" student.
• Be a citizen, permanent resident, or eligible noncitizen of the United States.
• Be enrolled or accepted for enrollment at least half-time in an eligible degree or certificate program at an eligible institution.
• Be in good standing and making satisfactory academic progress if currently enrolled.
• Not be attending elementary or secondary school.
• Not be in default or owe a refund on any educational grant or loan unless satisfactory arrangements have been made toward repayment of the debt.

Graduate/Professional Eligibility Criteria

To be eligible for a Federal PLUS Loan, you must:

• Be a citizen, permanent resident, or eligible noncitizen of the United States and verify your Social Security number and immigration status.
• Not be in default or owe a refund on any educational grant or loan.
• Not be determined to have an adverse credit history, as defined by federal regulations.

Interest Rate

Federal PLUS Loans have a fixed interest rate, which is capped at 9%, regardless of any Federal PLUS Loans the borrower may have outstanding at a different interest rate. Therefore, a borrower may have separate loans at different rates. The fixed rate in effect beginning July 1, 2006, is 8.5%.

Fees Paid by the Borrower

A 1% federal default fee and a 3% origination fee will be charged to the borrower. These fees are based on the amount borrowed and are deducted from the loan proceeds. Some lenders may pay the default fee on your behalf.

Lenders may also offer discounted interest rates. Check with your lender to determine applicable fees.

Loan Limits

A parent may receive an amount not to exceed the student's estimated cost of attendance minus any financial aid the student has been or will be awarded during the period of enrollment. There are no aggregate loan limits.

Loan Proceeds

Federal PLUS Loans disbursed by check are required to be made copayable to the parent and the school. Loan checks are mailed directly to the school by the lender. The school must certify the student's eligibility prior to releasing the loan proceeds.

In the case of an electronic funds transfer (EFT) or master check, the parent may provide authorization on the loan application or complete a Borrower Authorization Statement to apply funds directly to the student's account with the school.

Repayment

Repayment of principal and interest begins within 60 days after the date the loan is fully disbursed unless an authorized deferment of principal is granted to the borrower. Interest begins to accrue upon disbursement and must be paid by the borrower monthly or quarterly or be capitalized (added to the principal). Borrowers have at least 5 years, but no more than 10 years, to repay their loans under the standard, graduated, or income-sensitive repayment option. For new borrowers on or after October 7, 1998 (borrowers who have no outstanding balance on loans made before this date), an extended repayment plan is available if student loan debt is in excess of $30,000. Under the extended repayment plan, the repayment term can extend up to 25 years depending on the amount of indebtedness.

Use the Loan Repayment Calculator to get an idea of your monthly loan payment amount.

Insurance

KHEAA insures Federal PLUS Loans made by participating lenders against the death of a student for whom the parent borrowed; default, death, or total and permanent disability; false certification of the loan; and, under certain conditions, either bankruptcy of the borrower, school closure, or partial discharge for failure to make refund. The holder of the loan files a claim with KHEAA and receives reimbursement for principal and interest pursuant to an executed Contract of Insurance. In the case of default or bankruptcy, this insurance only repays the lender for its loss on the loan and does not relieve the borrower of his/her obligation to repay.

Preapproval Options

Many lenders offer preapproval options through their Web site or toll-free telephone number. Contact your school or lender to see if this service is offered.

Eligible Lenders

Lenders may include:

• National and state-chartered banks.
• Mutual savings banks.
• Savings and loan associations.
• Stock savings banks.
• Credit unions and pension funds.
• Insurance and trust companies.
• State agencies.
• Other entities authorized under the Higher Education Act of 1965, as amended.

Applications and More Information

Applications for Federal PLUS Loans may be obtained from financial aid offices at participating postsecondary schools, participating lenders, or KHEAA.

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