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 Direct Plus Loans

Direct PLUS Loans are part of the federal Direct Loan Program, which offers low-interest loans to students to help them pay for college. The loans are called Direct Loans because they are made directly from the U.S. Department of Education, without going through a bank or other lender.

Unlike most other federal student loans, PLUS Loans are not awarded to students when they apply for aid. Instead, graduate/professional students (Grad PLUS loan) and parents of undergraduates (PLUS Loan) apply for these loans separately if they need additional funds to cover their educational costs.

After applying for and being approved for a Direct PLUS Loan, it will appear on the student's financial aid Award Notice. You will be required to complete the Direct Loan Program requirements listed on this page in order to receive your loan funds.

On this page

 

ABOUT THE DIRECT PLUS LOAN

The Direct PLUS Loan is unsubsidized, meaning that interest accrues while the student is enrolled at least half-time and during deferment periods. Eligibility is not based on financial need, and graduate students and parents of undergraduates may borrow up to the amount of the student’s Cost of Attendance minus any other financial assistance a student receives.

The Direct PLUS Loan may be of particular interest to students and parents who: 

  • are not eligible for other types of financial aid,
  • have unusual costs above the standard student expense budgets,
  • have remaining financial need after other forms of financial aid have been awarded, or
  • wish to borrow all or part of their Expected Family Contribution.

PLUS Loans offer advantages when compared with private education loans, including the stability of federal funding, the fixed interest rate, and repayment and deferment options. See Eligibility, Loan Terms, and Requirements below and the Comparing Supplemental Loans page for more details.

ELIGIBILITY, LOAN TERMS, AND REQUIREMENTS

Students (or their parents) must submit a Free Application for Federal Student Aid (FAFSA) when applying for a PLUS or Grad PLUS Loan.

Borrowers must have an acceptable credit history or an endorser (someone who agrees to repay the loan if you do not pay it) with an acceptable credit history. Families with adverse credit histories are sometimes allowed to borrow if they are able to document extenuating circumstances for their credit situation.

Key information to know:

  • Because credit reports are only valid for 90 days, and we process PLUS Loan applications in July, we wait until mid-May to accept PLUS applications. (This saves you from requiring another credit check at the time your application is processed.)
  • When you apply, we will assume that you are requesting a loan for the Fall and Winter 2014-2015 terms. If you would like the loan for one term only, please advise us as soon as possible. We will begin sending applications to the federal processor in early July.
  • Your PLUS Loan eligibility will be determined when your application is processed in July.
  • You may contact our office to receive a paper version of the PLUS Loan application. The paper application is longer and you will not know credit check results until your application is processed. After completing the application, you must fill out a master promissory note online.

More information about the terms of the Direct PLUS Loan is included in the table below:

Eligibility Criteria Loan Terms Additional Information/Requirements
 DIRECT PLUS LOAN
(for Parents of Dependent Undergraduates)

• Non-need-based

• Parent borrows on behalf of undergraduate student

• Student must be enrolled at least half-time in a degree program

• Borrower must be a U.S. citizen or eligible noncitizen

• Borrower cannot be 90 days or more delinquent on the repayment of any debt (180 days delinquent on mortgage loan or medical bill payments) or the subject of a default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off of a Title IV debt during the last five years.

• 6.41% variable-fixed interest rate (effective for loans originated July 1, 2013. Rates change each July 1.)  

• 4.288% origination fee (effective for loans originated Dec. 1, 2013. Fees change each June and may change each fall due to the effects of federal budget cuts known as sequestration.)

• Parents may borrow up to the student’s Cost of Attendance minus other financial assistance

• Interest begins accruing immediately; may be paid periodically or capitalized 

• Repayment of principal and interest begins 60 days after loan is disbursed. (Parents may qualify for deferment while student is enrolled. Go to NSLDS.ed.gov, log in to find your servicer and contact them.)

• PLUS Loans may be consolidated with other Direct Loans  

• Students must complete the Free Application for Federal Student Aid (FAFSA).

• Borrowers accepting Direct Loan funds for the first time must complete an online Master Promissory Note

• More information from the U.S. Department of Education

 DIRECT GRADUATE PLUS LOAN
(for Graduate and Professional Students)

• Non-need-based

• The graduate student is the borrower

• Student must be enrolled at least half-time in a graduate-level program

• Borrower must be a U.S. citizen or eligible noncitizen

• Borrower cannot be 90 days or more delinquent on the repayment of any debt or the subject of a default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off of a Title IV debt during the last five years.

• 6.41% variable-fixed interest rate (effective for loans originated July 1, 2013. Rates change each July 1.) 

• 4.288% origination fee (effective for loans originated Dec. 1, 2013. Fees change each June and may change each fall due to the effects of federal budget cuts known as sequestration.)

• Students may borrow up to the cost of attendance minus other financial assistance

• Interest begins accruing immediately; may be paid periodically or capitalized

• Repayment of principal and interest begins 60 days after loan disbursed; however, payments may be deferred while borrower is enrolled at least half-time. (borrower must request
in-school deferment; Go to NSLDS.ed.gov, log in to find your servicer and contact them.)

• PLUS Loans may be consolidated with other Direct Loans.

• Borrower must complete the Free Application for Federal Student Aid (FAFSA).

• Borrowers accepting PLUS Loan funds for the first time must complete an online Master Promissory Note and Direct Loan Entrance Counseling. (Note: This is not the same as the Financial Awareness Counseling Tool on the same site.) See Completing Your Loan Requirements, below.

• Exit Counseling is required when students graduate or drop below half-time.

• More information from the U.S. Department of Education

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HOW TO APPLY: PARENTS OF UNDERGRADUATES

TO APPLY ONLINE FOR A PLUS LOAN FOR 2014-2015:

 In mid-May or later, visit StudentLoans.gov. (Note: This is the U.S. Department of Education’s Student Loan website, which has a .gov extension. Do not use studentloans.com, which is a commercial website.)

 Sign in (under Manage My Direct Loan) using your U.S. Department of Education Personal Identification Number (PIN). See illustration above.

 When the next page opens, select Request PLUS Loan from the menu in the lefthand column (or Start PLUS Application Process in the center of the page).

 Follow the steps to complete the application and credit check. In the School Name section, be sure to select University of Michigan-Ann Arbor.

 The results of your credit check will be available immediately. If your credit is approved, you will be given instructions for completing a PLUS Loan Master Promissory Note, if you have not already completed one. If your credit is not approved, you will have the option to (1) not pursue the loan, (2) obtain an endorser, or (3) appeal the credit decision.

 If you and/or your student are eligible non-U.S. citizens, you must also submit a copy of your U.S. Citizenship and Immigration Services document to the Office of Financial Aid to verify your current citizenship status. Copy both sides of the document, write the student's name and UMID on the copies, and fax them to our office at (734) 647-3081 or send them electronically.

TO APPLY FOR A PLUS LOAN FOR SPRING AND/OR SUMMER 2014, you may follow the instructions and select 2013-2014 as the aid year.
 

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HOW TO APPLY: GRADUATE AND PROFESSIONAL STUDENTS

TO APPLY ONLINE FOR A PLUS LOAN FOR 2014-2015:

 Complete a Free Application for Federal Student Aid (FAFSA), if you have not already done so.

 In mid-May or later,visit StudentLoans.gov (Be sure to use the .gov extension and not .com.)

 Sign in (under Manage My Direct Loan) using your U.S. Department of Education Personal Identification Number (PIN). See illustration above.

 When the next page opens, select Request PLUS Loan from the menu in the lefthand column (or Start PLUS Application Process in the center of the page).

 Follow the steps to complete the application and credit check. In the School Name section, be sure to select University of Michigan-Ann Arbor.

 The results of your credit check will be available immediately. If your credit is approved, you will be given instructions for completing a PLUS Loan Master Promissory Note, if you have not already completed one. If your credit is not approved, you will have the option to (1) not pursue the loan, (2) obtain an endorser, or (3) appeal the credit decision.

 If you are borrowing through the PLUS Program for the first time, you must also complete Direct Loan Entrance Counseling at StudentLoans.gov(Note: Required Entrance Counseling is NOT the same as the Financial Awareness Counseling Tool.)

TO APPLY FOR A PLUS LOAN FOR SPRING AND/OR SUMMER 2014, you may follow the instructions and select 2013-2014 as the aid year.
 

COMPLETING YOUR LOAN REQUIREMENTS

If you are a Direct PLUS Loan borrower, you will be required to complete three Direct Loan Program requirements: sign a master promissory note, complete entrance counseling, and complete exit counseling.

 MASTER PROMISSORY NOTES

Parents and students who are borrowing for the first time through the Direct Loan Program must complete a Direct Loan Master Promissory Note (MPN) in order to receive their loan funds. The MPN authorizes the University of Michigan to credit the Direct Loan funds to the U-M student's account.

Once you complete the MPN, you will not have to complete another Direct Loan MPN for the duration of your University of Michigan education. Please note, however, that if you have accepted other federal loans (e.g., Perkins, Health Professions, or Nursing Loans), you will need to complete separate promissory notes for those loans. The Office of Financial Aid will notify you of how to complete them.

How to Complete an Master Promissory Note

Before completing the MPN, be sure you have collected this information:

  • A Department of Education PIN Number: You will a PIN number issued from the U.S. Department of Education to complete the MPN on the web.  If you do not already have a PIN number, you should apply for one immediately. It takes up to 3 business days to receive your PIN information by email and 7-10 business days to receive it by regular mail. If you already have a PIN number, but you cannot locate it, click here. (Note that your PIN is NOT the same as the DRN number shown on your Student Aid Report.)
  • Your Social Security Number
  • Your permanent address and telephone number
  • Your driver's license number
  • Names, addresses, and phone numbers for two references

To complete your Master Promissory Note online (turn off all pop-up blockers prior to beginning):

 Go to StudentLoans.gov.

 Sign in under Manage My Direct Loan. (If you are a new Direct Loan borrower, follow the instructions for applying for a PIN.)

 After signing in, select Complete Master Promissory Note. Select the correct type of loan note.

 Be sure to select the correct name and address for the University of Michigan:

University of Michigan-Ann Arbor
503 Thompson Street
Ann Arbor, MI 48109-1340 - G02325

 Review the What You Need and What to Expect sections of the website (under the Learn More menu). If you need technical assistance, click on Contact Us.

If you prefer, you may complete a paper copy of the MPN instead, but there are more steps involved before your Direct Loan can be approved and disbursed, which could cause delays in receiving your loan funds. To complete a paper MPN, sign in at studentloans.gov; then select Complete MPN to complete the MPN electronically or Print MPN to print, complete, and mail a paper MPN.

 ENTRANCE AND EXIT COUNSELING

Entrance Counseling

If you are a graduate student PLUS borrower, you must complete Direct Loan Entrance Counseling on the U.S. Department of Education's StudentLoans.gov website. This interactive counseling session will help you understand your loan responsibilities. The counseling session and quiz will help students develop a budget for managing educational expenses and also understand their loan responsibilities. You must complete the counseling before your loan funds can be disbursed to you.

Notes:

  • Required Entrance Counseling is NOT the same as the Financial Awareness Counseling Tool.
  • Taking a demo counseling session will not fulfill your requirement.
  • Parent PLUS borrowers are not required to complete entrance counseling.

Exit Counseling

Direct Loan Exit Counseling is required for Direct Loan student borrowers who are graduating or dropping below half-time enrollment. This counseling session helps borrowers understand their rights and responsibilities in repayment and helps them choose a repayment plan. You must use your Department of Education PIN to access this counseling session. To complete the Exit Counseling session, go to the StudentLoans.gov website. Click the "Complete Counseling" link and follow the link to "Exit Counseling" to begin.

Notes:

  • Exit Counseling is not the same as the Financial Awareness Counseling Tool on the same site.
  • Taking a demo counseling session will not fulfill your requirement.
RECEIVING YOUR LOAN FUNDS

You must sign all of your loan documents and students must be enrolled at least half-time to receive your loan funds.  See Disbursement of Your Aid Funds for information about how your loan will be paid to you. Each time you borrow through the Direct Loan program, you will automatically receive your loan funds unless you decline them (see How to Accept, Decline, or Reduce Your Awards).

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When we accept and process PLUS applications:

Because credit reports are only valid for 90 days, and we process PLUS Loan applications in July, we wait until mid-May to accept PLUS applications. (This saves you from requiring another credit check at the time your application is processed.)

  • When you apply, we will assume that you are requesting a loan for the Fall and Winter terms. If you would like the loan for one term only, please advise us as soon as possible. We will begin sending applications to the federal processor in early July.
  • Your PLUS Loan eligibility will be determined when your application is processed in July.
  • You may contact our office to receive a paper version of the PLUS Loan application. The paper application is longer and you will not know credit check results until your application is processed. After completing the application, you must fill out a master promissory note online.

 

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