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What is a PLUS Loan?

what is a plus loan

COCC participates in the William D Ford Federal Direct Loan program.  The Parent Loan for Undergraduate Student (PLUS) loans are included under the Direct Loan program.  PLUS loans enable parents, stepparents, or adoptive parents of a dependent undergraduate student to borrow money for their child's college expenses.  Direct Loans are borrowed directly from the federal government.  Many families find PLUS loans an attractive alternative to using lifetime savings or investments for educational expenses.

Who is Eligible?

Parents, stepparents, and adoptive parents of dependent undergraduate students attending school at least half-time are eligible to apply for a PLUS loan.  PLUS loans are not based on the family's income or assets.  The parent must be a US citizen or eligible non-citizen.  A credit check, from a national credit bureau, will be obtained by the lender to determine if the parent will be eligible (this check will remain valid for 180 days).  If the parent is initially denied a PLUS loan but then qualifies, by documenting extenuating circumstances or obtaining an endorser, the parent will be required to complete loan counseling before the loan can be disbursed to the school.  For more information regarding eligibility requirements, visit the Department of Education's PLUS loan web site.  COCC requires that students submit a complete Free Application for Federal Student Aid (FAFSA) prior to the parent borrower applying for a PLUS loan.

If the borrower is not eligible for the PLUS loan, the student may be eligible for an additional Unsubsidized Direct Loan.  Further information is available at the Financial Aid Office.

Interest Rates and Fees

Interest is charged on the Direct PLUS Loans during all periods, beginning on the date of the loan's first disbursement.  In addition to the interest, a loan origination fee, a percentage of the principal amount, is deducted from each disbursement.  This fee helps reduce the cost of making these low-interest loans.  The origination fee is deducted before the funds are sent to the school, therefore, the loan amount actually received will be less than the amount to be repaid.

For PLUS loans disbursed on or after July 1, 2015 and before July 1, 2016, the fixed interest rate is 6.84%.

For PLUS loans disbursed on or after July 1, 2014 and before July 1, 2015, the fixed interest rate is 7.21%.

How much can I borrow?

The maximum eligibility (yearly limit) on a PLUS Loan is equal to the student’s cost of attendance budget minus any other financial aid the student receives.  Funds are available based on enrollment in a minimum

of 6 credits per term.

Click here for an example

Sally will be attending COCC for the Fall, Winter, Spring terms.  She has decided to live with her parent while she attends school.  Her cost of attendance budget totals $9,312 and COCC can only offer Sally a subsidized loan for $3,500.  The loan will not be enough to cover tuition, fees, charges, and education expenses.  So Sally's parent(s) decide to apply for a PLUS loan.  The parent(s) will be able to apply for a $5,812 PLUS loan.

(This example is for demonstration purposes only.  PLUS loan differ due to the student individual circumstances.  If you have concerns or question, contact the Financial Aid Office.

When are PLUS Loans disbursed?

The loan funds will be sent to the school by the Department of Education and will be used to pay for tuition, fees, room, board, and other authorized charges.  Disbursement dates will coincide with dates that are specified by the school and cannot be requested prior to regularly scheduled disbursement dates.  For disbursement dates please view the 'Term Disbursement Information'   located on our web site.

If any loan money remain, the parent will receive the amount as a check, unless they authorize the remaining money to be released to the student.  Any remaining loan money must be used for the education expenses of the student.

When do PLUS Loans have to be repaid?

There is no grace period for Direct PLUS Loans.  The repayment period for each Direct PLUS Loan received begins 60 days after the school makes the last disbursement of the loan.  This means that interest begins to accumulate at the time the first disbursement is made to the College. Parents must begin repaying both principal and interest while the student is in school.  Visit the Department of Education PLUS Loan web site for deferments and repayment options.

Click here for a quick reference guide on choosing a student/parent loan.

Other than interest, is there a charge for the PLUS loan?

Yes, there is a fee on all PLUS loans.  The fee is a percentage of the loan amount and is proportionately deducted from each loan disbursement.  This percentage varies depending on when the loans was disbursed.

Loans disbursed on or after October 1, 2015 and before October 1, 2016, loan fee is 4.272%.

Loans disbursed on or after October 1, 2014 and before October 1, 2015, loan fee is 4.272%.

Loans disbursed prior to October 1, 2014 will have different loan fees.

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