WHAT IS A PARENT PLUS LOAN?
The Parent PLUS Loan is a federal loan in the parent's name. It's often used to help fill the gap when the student's aid doesn't cover all college-related expenses. A parent can borrow up to the cost of attendance minus the student aid. It's offered by the college via the FAFSA, but the parent must do a separate credit check application to secure the loan. The credit check application is available annually after May 1st. You will need to re-apply each year. You must be credit-approved before the loan will show as a credit on the student's invoice, so you'll want to apply as early as possible after May 1st.
HOW TO APPLY-
Parent borrowers must login with their FSA ID at StudentAid.gov. It's important to login as the parent, not the student.
Click the Parent tab. Then complete the following annually: 'APPLY FOR A PARENT PLUS LOAN' then click the box "LOG IN TO START". Enter your FSA ID and password to log in. Complete all sections as prompted. After completing the application and authorizing a credit check you will be notified immediately on the screen if you are approved or denied.
»If approved, new borrowers will be asked to complete a master promissory note online (more detailed instructions below). Know that typically a signed master promissory note will be good for ten years, but you must still complete the credit check request every year (on/after May 1st) if you wish to borrow for that student.
»If denied, the parent can appeal the denial, or ask a credit-worthy cosigner to obtain a FSA ID and endorse the loan online. If the parent decides not to pursue the PLUS Loan with an endorser, the student can borrow additional unsubsidized student loan funds- up to $4,000/yr for freshman & sophomores, and up to $5,000/yr for juniors & seniors. The student can contact our office to request the additional student loan funds (our email is FAO@newpaltz.edu).
The Applicant Services Department is available to assist you with any questions about credit decisions, endorsements or the application process: (800)557-7394.
What are the costs to borrow?
For 2020/21, the interest rate effective July 1st, 2020 is 5.30%. For loans disbursed prior to October 1, 2020, the Federal Direct Loan Origination fees for a Parent loan (PLUS) is 4.236%. For loans disbursed after October 1, 2020, the origination fee is 4.228%.
Please note that the origination fee will be applied before the loan money disburses to the school.
How much should I borrow?
Unless you specify otherwise during the application, the PLUS will be ONE loan with TWO disbursements (fall & spring). As a general rule of thumb, you can view the fall invoice to see how much is needed to cover the student's charges, then double that amount and add a little (if you'd like to provide a cushion & cover the fee.)
Example- if you need $5000 for fall, then you may want to apply for roughly $10,500. After origination fees are deducted you will get around $5000 for fall and $5000 for spring. Or, if you are unsure of how much to borrow- you can request the max amount on the application.
When will my loan pay out?
Loans disburse starting the second week of classes & any excess funds will get mailed home to the parent in the form of an exchange check (early Sept. for fall & early Feb. for spring). You can use that refund to pay for any school-related expenses. NOTE- The federal website allows you to check a box during the PLUS request stating that you want excess funds to go to the student instead. Regardless of the online options, please be advised that New Paltz will always refund the excess PLUS funds to the parent borrower, not the student.
Want to defer your repayment?
You can now request deferment during the PLUS request process while you are applying. During the online application just check the box that you want to defer the payments until after your student graduates.
An in-school deferment will delay payments on the PLUS loan until 6 months after student ceases to be enrolled at least half-time. Otherwise, repayment on the PLUS loan begins 60 days after the loan is fully disbursed for the academic year. Remember, interest accrues on PLUS during the deferment period. Therefore, we recommend that you do not delay repayment if at all possible and at least try to schedule interest payments during this deferment period.
Who will I repay my loan to?
After your loan disburses to the school it will get assigned to a loan servicer. Your federally-contracted loan servicer will contact you via mail with additional information. Not sure who your servicer is? You can find out by logging in to studentaid.gov or by calling (800) 433-3243. Your servicer will typically assign you to a 10 yr. repayment plan. More info on payment plans can be found on the FSA website: PLUS Loans
What are some of the benefits of borrowing Parent PLUS Loans?
- Modest fixed interest rate with in-school payment deferment option.
- No pre-payment penalty.
- Interest can be deducted on your tax return.
- Lower overall cost than most alternative private loans.
- Should parent borrower or student become deceased the balance of the loan will be cancelled.
Need more help applying? Here are detailed step-by-step application instructions-
1»To be eligible for Parent PLUS, the family must first file the FAFSA, then the student should accept the PLUS loan as part of their aid package on my.newpaltz.
2» The parent must visit StudentAid.gov and click "LOG IN".
Click "Apply for a PLUS Loan" and select 'Apply for a Parent PLUS Loan'
Select the academic year and then fill out all sections:
section 1 (School & Loan Info) select STATE UNIVERSITY COLLEGE- NEW PALTZ
section 2 (Borrower Info)
section 3 (Review Request)
section 4 (Credit Check & Submit)
3» If credit is approved continue to step 5.
4» If credit is denied, you have two options:
a) The student qualifies for additional unsubsidized student loan consideration. ($4,000 for freshmen and sophomores or $5,000 for juniors and seniors) Submit or fax (845-257-3568) denial of credit to our office along with the student's request for the additional unsubsidized loan. OR...
b) If your credit is denied but you still want to pursue a PLUS loan you can login later to add a credit-worthy endorser. (A PLUS applicant with an adverse credit history may still receive a Direct PLUS Loan if he/she obtains an endorser who does not have an adverse credit history. The endorser is responsible for repaying the Direct PLUS loan if the primary borrower does not.) You can contact Applicant Services at (800)557-7394 if you need help with the endorsement process.
5» If you receive a message stating "Congratulations your application for a Direct Plus has been approved" you will then need to complete a Master Promissory Note (MPN). If you are a continuing borrower who already completed an MPN last year, typically you are not required to sign a new note (but if you do then that's fine too). Complete all sections of the note and click SUBMIT at the end:
section 1 (Parent Borrower Information)
section 2 (Requires 2 Personal References)
section 3 (Terms & Conditions- make sure you read and accept all statements)
section 4 (Review & Sign- type in your name as it's registered w/ your pin)
Make sure to visit our Parent Page which has lots of other helpful info for parents.
Also, don't miss our handy financial aid checklist!