PLUS LOAN FOR PARENTS

Transcription

1 INSTRUCTIONS FEDERAL DIRECT PLUS LOAN FOR PARENTS The Federal Direct PLUS Loan is one option available to help parents pay their child s college costs. Unlike loans in the student s name that are repaid by the student after college (such as the Federal Direct Subsidized/Unsubsidized Loan), parents begin to repay the PLUS loan with interest 60 days after the second disbursement. Although your family does not need to demonstrate financial need, the Free Application for Federal Student Aid (FAFSA) must be filed in order to use the loan. Furthermore, parent borrowers must be deemed creditworthy. Detailed information about the loan is found inside. How much can I borrow? Use the UE Estimated Net Cost Summary or Estimated Cost Calculator to assist with calculating the amount of PLUS loan you would need to pay your balance due to UE. The PLUS Loan may be borrowed in amounts that overpay the directly-billed UE charges, but only up to the Cost of Attendance (COA) described within. Excess loan proceeds may be refunded to the student or the parent through the UE Office of Student Accounts and be used for indirect educational expenses such as books, supplies, transportation, and personal expenses. FOLLOW THESE STEPS TO APPLY FOR A FEDERAL DIRECT PLUS LOAN FIRST-TIME PLUS BORROWERS Complete an electronic Master Promissory Note (MPN) for PLUS loans at studentloans.gov. Note: Beginning in May 2015, the US Department of Education replaced the FAFSA PIN with the FSA ID. If the parent who is applying for the PLUS Loan has not already created an FSA ID, he or she must create this first at fsaid.ed.gov before completing the MPN. PARENTS OF UE STUDENTS WHO BORROWED PLUS LAST YEAR If you have previously borrowed a Federal Direct PLUS Loan for your student at UE, your MPN should still be valid. If a different parent wishes to borrow for , follow the instructions at the left for first-time PLUS borrowers. BOTH NEW AND REPEAT PARENT BORROWERS SHOULD DO THE FOLLOWING: n Determine the amount you wish to borrow by using the UE Estimated Net Cost Summary or Estimated Cost Calculator available at n Complete and return Parts 1, 2, and 3 of this paper work to the University of Evansville Office of Financial Aid. n Note that UE requires that you apply for the PLUS loan using our paper Loan Request Form (Part 1, included). Please do not attempt to complete the PLUS request process at studentloans.gov.

2 FEDERAL DIRECT PARENT LOAN F THE FEDERAL DIRECT LOAN PROGRAM The US Department of Education administers the William D. Ford Federal Direct Loan Program. The program consists of the Federal Direct Subsidized and Unsubsidized Loans (for students) and PLUS Loans (for parents of undergraduate students). Independent graduate and professional students may also borrow through the Graduate PLUS Loan program. Direct loans are made with federal capital and are owned by the federal government. Loan repayment is made to the US Department of Education s federal loan servicers. BORROWER ELIGIBILITY n The student must file the Free Application for Federal Student Aid (FAFSA). n However, you do not have to demonstrate financial need according to the FAFSA to use the PLUS loan. n You must be parents, stepparents, or adoptive parents of a dependent, undergraduate student who is enrolled at least half-time. n In the case of divorced or separated parents, both parents may apply for separate PLUS loans. The sum of both loans plus other financial aid is limited to the school s Cost of Attendance. n You must be a US citizen, national, or an eligible non-citizen. n You must not be in default on any federal education loans or owe an overpayment on a federal education grant. n You must pass a credit check performed by the US Department of Education. The credit check is a basic screening for adverse credit history and does not take your income or assets into consideration. HOW MUCH CAN I BORROW? You can use a Federal Direct PLUS Loan to cover all or part of your student s educational expenses. You may wish to request just enough PLUS funds to pay your balance owed to UE and handle other expenses on your own as they arise throughout the year, or you may choose to borrow your maximum eligibility, which will result in an overpayment of UE s directlybilled costs (tuition, fees, room, meals). Excess loan proceeds may be refunded to either the parent or student at the beginning of each semester and can be used for indirect educational expenses such as books, supplies, and transportation. The sum of all financial aid (including all forms of loans) may not exceed the dependent student s Cost of Attendance (COA). The Cost of Attendance is an official figure that all universities compute. It is the sum of tuition, fees, room, meals, books, travel allowance, and personal expenses. The Cost of Attendance is not what you will be charged by UE, rather a figure that places a ceiling on the amount of all financial aid allowed. More information regarding Cost of Attendance can be found at aid/budgets.cfm. Your maximum PLUS loan eligibility is the difference between the appropriate Cost of Attendance minus all other financial aid offered to your student. To assist you in determining your annual balance due to UE for directly-billed charges, please use the UE Estimated Cost Calculator available at All new parent borrowers must complete an electronic Master Promissory Note for Parent PLUS Loans at studentloans.gov.

3 OR UNDERGRADUATE STUDENTS HOW WILL THE LOAN PROCEEDS BE DISBURSED? At the beginning of each semester, one half of the annual loan amount requested will be transmitted electronically to your child s University of Evansville Student Account to apply toward the UE charges for tuition, fees, room, and meals. Currently, the US Department of Education withholds an origination fee of percent (subject to change October 1) before disbursing your loan; therefore, you will receive only percent of the amount you request (see Loan Fees below for details). INTEREST RATE The interest rate for Federal Direct PLUS Loans is currently fixed at 6.84 percent (subject to change July 1). Interest is charged on the loan during all periods, beginning on the date of your loan s first disbursement. LOAN FEES Currently, the US Department of Education withholds a percent origination fee before disbursing the loan to UE. (This fee may increase at the federal government s discretion.) Therefore, you may need to inflate the amount you request so that the net loan received by UE will cover the balance due. The most current information about loan fees and interest rates can be found on the US Department of Education s Direct Loan website at studentaid.ed.gov/types/ loans/plus. HOW MUCH TIME WILL I HAVE TO REPAY MY LOAN? Generally, you will have from 10 to 25 years to repay your loan, depending on the amount you borrow and the repayment plan you choose. Parents can choose from standard, graduated, and extended repayment plans. You can change plans anytime. There is no penalty if you make payments before they are due or pay more than the amount due each month. CAN I EVER POSTPONE MAKING LOAN PAYMENTS? PLUS loan borrowers whose loans were first disbursed on or after July 1, 2008, may choose to have repayment deferred while the student for whom the parent borrowed is enrolled at least half-time and for an additional six months after the student is no longer enrolled at least half-time. Interest continues to accrue during these periods and will be capitalized (added to the unpaid principal balance) if not paid by the parent during the deferment. For more information regarding the Federal PLUS Loan, visit studentaid.ed.gov/types/loans/plus. HOW WILL I REPAY THE LOAN? Unless you make formal arrangements for a deferment through your loan s servicer, you will begin repaying a PLUS loan within 60 days after the full amount that you have borrowed for the school year has been disbursed. In most cases, you will need to make your first loan payment in February of your child s freshman year of college. You will receive information from one of the Department of Education s Direct Loan Servicers instructing you where to mail your payments or how to set up online management and payment of your loan. Through your servicer, you may also obtain forbearance forms, report address/name changes, and change repayment plans.

4 HOW MUCH WILL I HAVE TO PAY EACH MONTH? The chart below lists estimates of what your minimum monthly payment would be at the current fixed interest rate of 7.21 percent under the standard 10-year repayment plan. Sample Repayment Chart Loan Balance Monthly Payment $ 5,000 $ 58 10, , , StudentLoans.gov Here you will find links for the essential information to set up your Federal Direct PLUS Loan and understand the program. n Master Promissory Note (MPN) You must complete a Master Promissory Note for Parent PLUS Loans. This is REQUIRED for all first-time borrowers. You must sign in to the site using your FSA ID. Note: Beginning in May 2015, the US Department of Education replaced the FAFSA PIN with the FSA ID. If the parent who is applying for the PLUS Loan has not already created an FSA ID, he or she must create this first at fsaid.ed.gov before completing the MPN. The MPN should be valid during your student s entire UE enrollment. You will also find links for information about: n Estimating monthly payments n Loan consolidation n Making loan payments n Requesting a deferment PLUS LOAN For more information please contact: Amy Sowders, Student Loan Specialist Office of Financial Aid 1800 Lincoln Avenue n Evansville, Indiana n n Fax

5 PARTS 1, 2, and 3 FEDERAL DIRECT PLUS LOAN FOR PARENTS If you plan to use the Federal Direct PLUS Loan to pay all or part of your student s college costs you must: 1. Return parts 1, 2, and 3 to the UE Office of Financial Aid AND 2. Follow all instructions for either first-time or repeat borrowers FREE APPLICATION FOR FEDERAL STUDENT AID (FAFSA) Students must file the Free Application for Federal Student Aid (FAFSA) in order for the parent to borrow through the Federal PLUS Loan Program. It is NOT necessary for the family to demonstrate financial need to use the PLUS Loan. Filing the FAFSA allows the student to borrow through the Federal Direct Subsidized/Unsubsidized Loan program, which has more favorable rates and terms than the PLUS Loan. Filing the FAFSA also ensures that your student is considered for all other need-based aid programs.

6 PART 1 Federal Direct PLUS Request Form Return parts 1, 2, and 3 to UE Office of Financial Aid Student Last Name Student First Name MI Student Social Security Number Student Date of Birth Parent Social Security Number Parent Borrower First Name MI Parent Borrower Last Name Parent Date of Birth (MM/DD/YY) Street Address City State Zip Code Area Code and Telephone Number Parent Address AMOUNT YOU ARE REQUESTING Determine the amount you are requesting for the school year. Borrowing the maximum amount allowed will result in an overpayment of the student s directly-billed charges for tuition, fees, room, and board. Write the amount you are requesting. $ (Use whole dollar amounts.) The actual amount disbursed will be minus a federal origination fee of 4.292% (current fee at time of printing; subject to change October 1). I request my PLUS loan for the following semester(s): Fall and Spring semesters (each semester, UE will receive a disbursement for one-half of your PLUS loan amount) Fall semester only Spring semester only Summer only (student must contact Office of Financial Aid beginning March 2016) STATEMENT OF UNDERSTANDING AND CERTIFICATION I understand that the Federal Direct Parent Loan for Undergraduate Students (PLUS) is a resource to assist parents of dependent students in paying the out-of-pocket expenses not covered by aid offered to the student. I understand that I will begin to repay the PLUS loan, with interest, within 60 days of the second loan disbursement unless I formally request a deferment. I authorize the University of Evansville to initiate a credit check and to receive the results of that credit screening. I understand that I must also complete an electronic Master Promissory Note for Parent PLUS Loans at studentloans.gov if I am a first-time borrower. I certify that the information provided on this form is true and correct and that I am the parent or stepparent of the dependent student. Further, I certify that the student and I are not liable for an overpayment of any federal grant or loan made, are not in default, or if so, have made satisfactory payment arrangements with the holder(s) of any defaulted loan(s), and that we do not have property subject to a judgment lien for a debt owed to the United States. I also certify that I am a citizen, permanent resident, or eligible non-citizen of the United States. Parent Borrower s Signature Date Please return parts 1, 2, and 3 to: Office of Financial Aid n University of Evansville n 1800 Lincoln Avenue n Evansville, Indiana n n Fax FOR OFFICE OF FINANCIAL AID USE ONLY LOAN PERIOD: Full Year Semester I Semester II Summer GRADE LEVEL: ENROLLMENT STATUS: FT HT COST OF EDUCATION: $ COMPLETION DATE: FINANCIAL AID: $ CERTIFIED AMOUNT: $ DIFFERENCE: $ Electronic MPN on File: Yes No DATE:

7 PLUS Loan Credit Check PART 2 To be eligible for the Federal Direct Parent Loan for Undergraduate Students (PLUS), the parent borrower must not have an adverse credit history. By completing and signing this form, you are authorizing the University of Evansville to initiate a credit check which is performed by the US Department of Education s Direct Loan Servicing Center. If I am approved, please process a Federal Direct PLUS Loan for me for the amount I have written on the PLUS Loan Request Form (see part 1). I understand that if I am a new borrower, I must also complete an electronic Master Promissory Note for Parent PLUS Loans at studentloans.gov. Parents who anticipate a PLUS denial due to adverse credit history: When a parent is denied a PLUS due to adverse credit history, the student may be eligible for an additional Federal Direct Unsubsidized Loan. This form may be used to obtain a PLUS denial in order to establish additional Direct Loan eligibility for your student. If you anticipate a PLUS denial, please instruct the Office of Financial Aid how to proceed in the event that you are NOT denied: I do NOT wish to borrow a PLUS Loan, even if I am approved. I am completing this form for the purpose of a credit check only in an attempt to establish additional Direct Unsubsidized Loan eligibility for my student. WHAT HAPPENS IF I AM DENIED THE LOAN DUE TO ADVERSE CREDIT HISTORY? In this case, your student may be able to borrow additional amounts of Unsubsidized Federal Direct Loan, normally available only to older, independent students. The annual limits are $4,000 for freshmen and sophomores and $5,000 for juniors and seniors. If your loan is denied, we will inform you via and provide instructions to allow your student to obtain the additional Direct Loan funds. The credit check results are valid for 180 days. Please return parts 1, 2, and 3 to: Office of Financial Aid University of Evansville 1800 Lincoln Avenue n Evansville, Indiana n n Fax Note: Part 1 must be completed in order for us to perform the credit check. Even if you are anticipating a PLUS Loan denial, you must fill out Part 1 completely.

8 PLUS LOAN CREDIT AUTHORIZATION FORM FOR OFFICE OF STUDENT ACCOUNTS PART 3 Date Dear Parent: The Federal Direct PLUS Loan may be used to pay all or part of your student s remaining charges, after scholarships, grants, and student loans have been deducted. You are allowed to borrow an amount that exceeds what you owe in order to have extra funds for books, supplies, transportation, and other expenses related to your student s education. This form will instruct our Office of Student Accounts how to process excess funds resulting from this loan. If you request your PLUS Loan for the entire year, it will be disbursed to the University of Evansville in two equal installments, at the beginning of each semester. Once a disbursement is received, we will apply it toward the unpaid balance of tuition, fees, room, meals, and other miscellaneous charges (including UE Bookstore charges billed directly by the University). After charges have been satisfied, excess PLUS Loan funds will then be handled as directed below. Excess proceeds may not be refunded until on or after the first official day of classes each semester. The credit may be retained on the student s account for future enrollment. You must select one of the following options: Refund credit balance to parent.* Refund credit balance to student. Apply credit to future term. *In the case of divorce or separation, when two parents are receiving a PLUS loan, refunds must be given to the student. I authorize the University of Evansville to apply PLUS Loan funds toward the payment of not only tuition, fees, room, and meals but also other miscellaneous charges billed directly by the University and, when necessary, unpaid charges for a previous term. I understand that I may rescind this authorization at any time by contacting the Office of Student Accounts. PLUS Loan Borrower s Signature Print Parent s Name Address City, State, Zip Code Date Print Student s Name Student s UE Colleague ID Number Daytime Telephone Number Please return parts 1, 2, and 3 to: Office of Financial Aid University of Evansville 1800 Lincoln Avenue n Evansville, Indiana n n Fax /15