Parent/Plus Loans

What is a Direct Parent/Plus Loan?
Plus loans are loans that allow parents (of dependent children) with good credit histories to borrow and pay the education expenses of each child who is an undergraduate.  As part of the eligibility requirements, parents will need to pass a credit check.

Where can I learn more about this type of loan?
Since UMFK is a Direct Lending (DL) school, we will now be processing Direct Parent/Plus Loans.  To learn more about this type of loan click here:

Before applying for this type of loan, get the best deal first!
Although not required, but highly recommended, we encourage the dependent student to complete the Free Application for Federal Student Aid (FAFSA).  By completing this form, the student will be considered for free money, (i.e. grants and scholarships), as well as, other possible student loans (i.e. Stafford and Perkins loans).  Consideration form Free money is always better than borrowing loan money.   Exhaust scholarship and grant possibilities first.  The aid offered by the school (including Federal loans) is usually the better deal.

What are the eligibility requirements for a Plus loan?

Plus loan applicants and the student must meet general eligibility requirements for federal student aid.

To qualify, the parent's child/student must be enrolled full or at least half-time at an eligible school and the parent must meet the credit criteria.  The Direct Parent Plus loan is a loan that a parent takes out on behalf of their child/dependent student.   The loan is in a parent's name and usually requires the applicant to be credit-worthy.  A cosigner may be required.

  • Services are also available on line at: Direct Lending. They can be reached at 1-800-848-0979.

Important: If for whatever reason a Direct Parent Plus loan is denied, the student should contact his/her college financial aid office for additional information and instructions.

What is the interest rate on a Parent/Plus Loan?
The interest rate is variable, this means that the interest rate could change each year of repayment but the rate will never exceed 9 percent. Repayment begins within 60 days after the final loan disbursement. There is no grace period.  Interest begins to accumulate at the time the first disbursement is made until the loan is paid in full. Parents' must begin repaying both principal and interest while the student is in school.  

Other than interest, is there a charge to get a Plus loan?
Parents will pay a fee of up to 4 percent of the loan. This fee will be deducted from the funds that you will receive.

How much can I borrow?
Parent/PLUS Loan borrowing limits vary with each student. The yearly limit is equal to student's cost of attendance minus other financial aid. In other words, a Plus loan, when added to all financial aid received, (including Perkins and Stafford loans, grants, scholarships and work-study), cannot exceed the student's Cost of Attendance.

                                           

 

The Parent Plus Loan Application Process

About Direct Lending.  The U.S. Department of Education is the lender and the school assists them in administering the Direct Loan. The process is relatively quick.  More information regarding Direct Lending is available at: www.ed.gov or dlenote.ed.gov or at: 1-800-848-0979.

The Process in a Nutshell:

Basically the application process consists of completing two steps:

  1. Direct Parent/Plus Loan - Application
  2. Direct Parent/Plus Loan - Master Promissory Note (MPN)

Both items can be completed in Step 1 and Step 2 (sections) below.

 

Step 1 of 2

Direct Parent/Plus Loan Application

Note: make sure to proceed to and complete Step 2.

Return completed loan application to:

UMFK, Financial Aid Office, 23 University Drive, Fort Kent, ME  04743.

Step 2 of 2

Direct Parent/Plus Loan Master Promissory Note (MPN)

About the Master Promissory Note (MPN):

When you sign a promissory note and receive loan funds, you are agreeing to repay the loan according to the terms of the note.

Except in cases where the loan is discharged (for instance in the death of the student) the loan must be repaid with interest, even if the student does not complete the program, does not like the program, or is unable to procure employment after completing the program.

 

Note: All required paperwork must be completed and the school informed before the school can consider and/or certify your loan request. 

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What if I do not want to complete the Plus Loan Online?

If you choose to not complete the process online, you will need to:

  1. contact the UMFK Financial Aid Office for an DL Plus Application
  2. contact Direct Lending at (1-800-848-0979) to request a Master Promissory Note (MPN). 

If you are completing a paper applications, the parent and the student must complete each of their sections on the form and you will need to forward the form(s) according to the instructions provided.  Keep in mind that the paper process usually requires more time to process.

My Plus Loan Application and MPN are completed, what happens next?

Your loan will either be approved or denied.

If your loan is denied, the student should contact his/her college financial aid office for additional information and instructions.  There may be other lending options available.

If your loan is approved, your lender (the Department of Education) will inform the school that your loan has been approved.  If the school has your Plus application, they will certify the loan.   Note: The school cannot certify a loan amount that is greater than the student's cost of attendance minus other financial aid.  Other eligibility requirements also apply.

How and when do I get my Parents' Plus Loan Money?
Funds are credited to the student's account only when: the student's financial aid file is complete, the Plus Application and the DL Parent's Master Promissory Note (MPN) is complete, the lender approves the loan and the Parent returns the "Plus Authorization" form to the UMFK Business Office, the student is registered, the semester has begun and the financial aid office recertifies the loan amount.

Loans are normally disbursed in two equal disbursement/installments, half of the total amount each semester.  Loan funds must first be used to pay for the student's tuition, fees, room and board and other school charges.

The business office will also include an "Authorization form for Parent Plus Excess Funds Holding" to complete. This form will ask the parent borrower what he/she would like UMFK Business Office to do with any excess funds, should a credit balance remain after the Plus loan funds are applied to the student's account. The parent will be instructed to completed form and return it to the UMFK Business Office.

If a credit balance remains on the student's account, as a result of the Plus loan, the parent will automatically receive the refund amount as a check or in cash, unless the parent authorizes UMFK to release the funds to the student or be applied to the student's school account. Any remaining loan money must be used for the student's education expenses.

How will I know if my Parents' Plus Loan funds have been applied to my student account/school bill?
To check if your Parent's Plus Loan funds have been received and applied to the student's UMFK student billing account, go to MaineStreet. (the student will login to MaineStreet by using the same LogID and Password as their campus email.)   In the "Student Service Center", locate "Finances", here you will find itemized billing information.   If a "PLUS Loan" is listed as a "Payment" this means that the amount shown has been received and deducted from the student's bill. Review the amounts for accuracy. If a bill is paid in full and any balance remains, that balance will be refunded to the student or the parent, in accordance with instructions received from the parent borrower. Contact the UMFK Business Office at 207-834-7552 for more information.

What parents need to know about paying back the Parent Plus loan?
Loans require repayment. If you have borrowed a Parent/Plus loan, it must be paid back - Repaying.  

What lender(s) did my parent(s) borrow from and how can we contact them?
Effective for the 2010-11 school year, UMFK will be processing Parent/Plus loans through Direct Lending, with the Department of Education as the lender.

For loan borrowers who borrowed prior to the 2010-11 school year, the majority of UMFK's Stafford Loans were processed through Sallie Mae and/or Nelnet.   The old lender names and information appears on the Lender/Servicer chart below.

Note: You should know the name of your servicer before making contact with them. If you are unsure about who your lender/servicer or guarantor is, how much you borrowed, when you borrowed, etc., you may try locating your loans through LoanLocator.  LoanLocator is the National Student Loan Clearinghouse's newest website service, designed specifically to help student borrowers track their education loans. Available through www.nslc.org, LoanLocator delivers to borrowers an up-to-date list of loan providers and means for contacting them via telephone or Internet.  You may also try, www.nslds.ed.gov. Or as a last resort

contact the Finance Authority of Maine (FAME). FAME can be reached at 1-800-228-3734 (in-state) or (207) 623-3263; Fax: (207) 623-0095; E-Mail: info@famemaine.com; web site: www.famemaine.com.

Below is a chart with Lender/Servicer contact information.

Loan Servicer Telephone Number Web site. Addresses
Direct Lending 1-800-848-0979 www.ed.gov/directloan
FISC 1-800-370-3472 or 207-783-2928 www.fiscorp.com
Nelnet 1-888-486-4722 www.nelnet.net
Sallie Mae 1-888-272-5543 www.salliemae.com

 

Tell me more about Direct Loan - Repayment, Deferment, Forbearance and Consolidation
Generally, repayment must begin within 60 days after the loan is fully disbursed. There is no grace period for these loans. This means interest begins to accumulate at the time the first disbursement is made. Parents must begin repaying both principal and interest while the student is still in school.

Under certain circumstances, parents can receive a deferment or forbearance on their loan, as long as it isn't in default. Generally, the same deferment or forbearance provisions that apply to Stafford Loans also apply to PLUS Loans.

For more information about these topics click on the appropriate links below:

Can we make DL Automated Payments?

Direct Loan Servicing Online:

What if I have Trouble Making DL Payments?

What happens if my Plus Loan goes into Default?

More information about FFELP loans and these topics (and others) is available at the end of this section, under "Where Can I Find More Information?"

 

OSFA Ombudsman Information
The SFA Ombudsman is working with student loan borrowers to informally resolve loan disputes and problems. They help borrowers having problems with the following federal loans:

  • Direct Loans - Subsidized and Unsubsidized Direct Student Loans, Direct PLUS Loans (for parents), and Direct Consolidation Loans
  • Federal Family Education Loans - Subsidized and Unsubsidized Stafford Loans, FFEL, PLUS Loans (for parents), and FFEL Consolidation Loans
  • Guaranteed Student Loans, SLS Loans
  • Perkins Loans

Ombudsman Contact Information
Customer Service Line: 1-877-557-2575

Web Site: http://ombudsman.ed.gov/

Mailing address:
Office of the Ombudsman
Student Financial Assistance
U.S. Department of Education
Rm. 3012, ROB #3
7th and D Streets, SW
Washington, DC 20202-5144

 

Where can I find More Information?

The links provided below are for Parents who have borrowed from the Department of Education through Direct Lending and/or from lenders other than through Direct Lending (DL).  

   Where are my Loans?

   General Information about Plus Loans:

   Consolidation:

   Loan Misc. Information:

   Loan Calculators:

Last updated 5/19/2009, 6/10/09, 12/31/09, 03/03/2010, 07/07/10