Parents of dependent undergraduate
students can borrow loans from the Parent Loan for Undergraduate
Students (PLUS) program. PLUS are designed to help parents
pay for educational expenses that are not covered by
other aid sources such as grants, scholarships, work
study, and student loans. PLUS are unsubsidized (interest
accruing) and are backed by the federal government.
The Ford Federal Direct Loan is the lending option for MU parents. FFDL allows the parent to borrow the PLUS directly from the U. S. Department of Education (ED).
Program Options: For the 2008-2009 academic year MU will only offer the Direct PLUS Loan option. The reason for this change is effective June 1, 2008, MOHELA discontinued their borrower benefit packages – Rate Relief and Public Service Reward Program. Thus PLUS loans disbursed through Direct Lending after June 1, 2008 will have a lower interest rate - - 7.9% versus 8.5%.
Qualifying Criteria
- Parent
borrower must not be in default on a federal loan.
-
Parent borrower
must either be a biological or adoptive parent, or
a stepparent whose information is on the FAFSA.
- Student
must be enrolled at least half time in a degree-seeking
program and not be in default on any federal loans.
-
Parent borrower generally will be required to pass
a credit check. Borrowers that don't pass the credit
check
have the option to obtain a credit worthy endorser
who agrees to repay the loan if the parent does not,
or the
option to allow the student to borrow additional funds
from the Unsubsidized FFDL (maximum
of $4000 for a freshman or sophomore and $5000 for
a junior or senior).
Amount
In most cases, the parent is
eligible to borrow up to the cost of attendance minus
any other financial aid the student receives. We recommend
only borrowing what is absolutely necessary as the
loan accrues interest from the day it is disbursed and
there
are processing fees charged on the loan.
Interest Rate
- Fixed Rate of 7.9%.
- Interest is charged on the loan from
the date the first disbursement is made until the loan
is paid
in full.
Processing Fees
At disbursement, ED calculates a 4% processing fee but only deducts 2.5% from the disbursement amount. If borrowers do not remain current during repayment, the other 1.5% is charged back to the loan balance.
Disbursement of Funds
PLUS funds are
sent to the University of Missouri - Columbia by the
lender. The loan may be disbursed in two
installments, generally equal amounts. The funds will
first be credited
to the student's MU account, and first used to pay
any balance due for tuition and fees, room and board,
and
other school charges. If any money remains it will
be refunded to the parent borrower to use to cover other
educational costs of the student. The refund will be
issued as a check, unless the parent authorizes it
to
be released to the student. Authorization includes the parent completing and returning a PLUS Refund to Student Request Form (accessible under printable forms) and other requested documents to the MU Student Financial Aid Office.
Repayment
Effective July 1, 2008, parents will be allowed to choose whether they want to start repayment immediately or defer payments until six months after the date the student ceases to be enrolled at least half time. During the deferment period, accruing interest can be 1) paid by the parent borrower monthly, or 2) paid by the parent borrower quarterly, or 3) capitalized quarterly. Parents not choosing to defer payments must begin repayment 60 days after the final loan disbursement for the academic year. In the case of a fall/winter loan, the last disbursement would be made during winter semester, or January. Payments would then be due in March. The parent borrower must begin repaying both principle and interest while the student is still in school. Payments will be approximately $12 per $1000 borrowed per month (a minimum of $50 per month).
Repayment is handled exclusively by ED's contractor, Direct Loan Servicing Center, currently based in New York.
ED currently offers a .25% discount on the repayment interest rate for borrowers who establish direct debit and are current on repayment.
Application and Promissory Note
Applications are available online at the link below. The University of Missouri-Columbia assists ED in administering the PLUS by distributing the loan application, certifying the loan amount requested, distributing the Master Promissory Note in paper if the parent does not sign one electronically, and disbursing the loan funds. ED uses a Master Promissory Note (MPN) which is designed for parent borrowers to use as a multi-year note for one dependent student. There will be one MPN created for each parent/student combination. Generally, as long as the parent borrower and the dependent student do not change, a new PLUS MPN is not required. There will not be an amount listed on the MPN since it can be used for multiple loans for multiple years. It's very important to keep disclosure statements to keep track of the amount borrowed. If a parent borrower applies with an endorser to get approved, then a new PLUS MPN will be required since the endorser is liable only for the specific loan or loans he or she agreed to endorse.
After a parent applies for an initial FFDL PLUS through MU, then MU will issue a POP (PLUS Online Password) for that borrower. The POP works as an electronic signature for MU's online FFDL PLUS application. Due to the implementation of the MPN, ED requires schools to collect a signature for each PLUS request. Any subsequent FFDL PLUS application on the web will ask for your POP. A unique POP is assigned for each parent/student combination. If you forget your POP, you may request that it be sent to you using the request functionality on our web site.
To apply, simply click on the appropriate link below for an online application.
2008-09 FFDL online application
(Fall 2008, Spring 2009)
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