Promissory Note

Entrance Counseling

Entrance Counseling is required for the following Federal loan types:

  • » Direct Subsidized
  • » Direct Unsubsidized

Interest Rates

Federal Loans

Federal PLUS Loan

What is a Federal Parent Loan for Undergraduate Students (PLUS)?

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Eligibility Requirements:
  • PLUS loans are only available to parents, step-parents, and legal guardians of dependent students. Please visit the Department of Education to apply for a Parent PLUS Loan.
  • Non-exempt students must have registered with the Selective Service Administration. Students are exempt if they are female, under 18, born before 1960, on active duty in the U.S. Armed Forces, citizens of the Federated State of Micronesia or the Marshall Islands, or permanent residents of the Trust Territory of the Pacific Islands (Palau).
  • The student and parent must not owe a refund on any federal grants, must not have borrowed federal student loans in excess of annual or aggregate loan limits, and must not be in default on any federal student loans unless satisfactory payment arrangements have been made.
  • The student and parent must be U.S. Citizen, U.S. Permanent Resident, or Other Eligible Non-citizen as defined by the U.S. Department of Education.
Enrollment Requirements:

The student must enroll for at least 6 credits in a degree-granting program for each semester in which the PLUS loan will be received.

PLUS Loan Application Process:
  1. Visit the Department of Education to submit a Parent Plus Loan Application

    Do you have to submit a FAFSA if you only want to borrow a PLUS loan?
    Yes. A FAFSA must be on file for the student before a Parent PLUS loan can be processed.

  2. The borrowing parent must have a Federal Student Aid ID (FSA ID) assigned by the Department of Education in order to electronically sign their PLUS loan Master Promissory Note with the Department of Education. If the borrowing parent does not have a FSA ID, one can be requested at the Federal Student Aid ID website.
  3. The Department of Education will evaluate your credit and approve or deny your application.
  4. If your application is approved and the school has electronically certified the loan, the Department of Education will disburse your loan funds to the UM Bursar’s Office.
  5. The UM Bursar’s Office will apply the loan funds to the student’s account.
Processing Fees:

The Department of Education is authorized to charge the borrower origination and guarantee fees. For loans disbursed before October 1, 2017 – the origination fee will be 4.276%. For loans disbursed on or after October 1, 2017 – the origination fee will be 4.264% The current guarantee fee is ZERO. Fees are deducted from each semester’s disbursement.

Interest Rate:

The Federal PLUS loan has a 7% fixed interest rate. Interest begins accruing when the loan is disbursed.

Repayment Terms:

Repayment begins 60 days after the funds are fully disbursed, and the repayment term is up to 10 years. Graduate students may defer repayment while they are in school. There is no six-month grace period as there is with the Direct Loan program. However, parents to may defer payments on the Parent PLUS loan while the undergraduate student on whose behalf they borrowed the PLUS loan is in-school and for a six-month grace period after the student graduates or drops below full-time enrollment. (Payments can also be deferred if the parents are themselves enrolled in college. They will need to submit an application for an in-school deferment). Note that since the interest on the PLUS loan is not subsidized, it continues to accrue while deferred and is capitalized when the loan enters repayment.

Borrowing Limits:

Parents may borrow up to the student’s yearly Projected Cost of Education minus all other aid the student is receiving (including other student loans). There is no cumulative borrowing limit.

What if the PLUS loan application is denied?

First, the parent should contact the Department of Education’s Applicant Services at 1-800-557-7394. Always check credit reports for errors. If there are problems that cannot be resolved, the parent may attempt to reapply with a cosigner or the student may borrow additional Federal Unsubsidized Direct Loan.

Note: Beginning March 29, 2015, Direct PLUS loan applicants who have been determined to have an adverse credit history, but who qualify for a Direct PLUS loan by documenting extenuating circumstances or by obtaining an endorser MUST complete a separate PLUS Loan Counseling. This special PLUS loan counseling can be found at the Department of Education’s web site.

When a parent’s PLUS loan application is denied and the parent chooses not to appeal or add an endorser the student becomes eligible to borrow up to $4,000 (freshmen and sophomores) or $5,000 (juniors and seniors) in additional Unsubsidized Direct Loan. This additional Direct Loan amount cannot exceed the student’s Projected Cost of Education minus all other aid (including other loans). Unsubsidized Direct Loans are not interest free while the student is in school. If a PLUS application is denied and the student would like to borrow additional Unsubsidized Direct Loan, please contact our office.