FEDERAL STAFFORD AND PLUS LOAN AVAILABILITY
There has been considerable publicity recently regarding lenders who are no longer participating in the Federal Stafford Loan (student) and PLUS Loan (parent) programs. We have been assured by a number of national lenders that our families will not have any difficulty in obtaining Stafford and PLUS Loans for 2008-2009. (As always, potential PLUS Loan borrowers must be judged credit-worthy in order to obtain funding.)
Click here for a discussion of "Facts and Myths" regarding the student loan "credit crunch" prepared by the National Association of Student Financial Aid Administrators (NASFAA).
RECOMMENDED LENDERS
Click here for a list of our recommended Federal PLUS Loan lenders. Regardless of our recommended lenders, we will process any loan (federal or alternative) from any lender or guarantee agency.
A Federal PLUS Loan is a non-need based loan given by a private lender (e.g., bank, credit union or other financial institution) to creditworthy parent(s).The interest rate is fixed at 8.5%. Many lenders offer additional borrower benefits that reduce the interest rate considerably. Interest starts to accrue at disbursement. Full repayment of principal and interest begins 60 days after the last disbursement for the loan period. The maximum repayment period is 10 years.
Parent(s) may apply for a Federal PLUS Loan for up to the annual cost of attendance minus any financial aid. Approval for this loan and the amount a parent is eligible to borrow is determined by the lender. If the Federal PLUS Loan is not approved by the lender, the student may borrow additional unsubsidized FSL funds (see Unsubsidized Federal Stafford Loan).
If the Federal PLUS Loan is approved by the lender, insurance and guarantee fees (2 to 3 percent) are deducted from the loan proceeds each semester before being sent to Carnegie Mellon. The proceeds will be sent to us via electronic funds transfer (EFT) or by check. If the funds are disbursed via EFT, they will be electronically deposited into your student account at Carnegie Mellon. If the funds are sent to us by check (made co-payable to your parent and Carnegie Mellon), Enrollment Services will send the check to your parent to be endorsed and returned to Enrollment Services to be deposited into your student account at Carnegie Mellon.
All parents wishing to borrow a Federal PLUS Loan for the first time are required to complete a Federal PLUS Master Promissory Note (MPN). If the parent who will be a first-time borrower of a Federal PLUS Loan has a U.S. Department of Education PIN, he or she may complete the Federal PLUS MPN online. New for 2008-2009: Students who do not apply for financial aid but whose parents plan to borrow a Federal PLUS Loan, are required to complete a FAFSA (Free Application for Federal Student Aid). Click here to review our list of recommended lenders and apply directly at the website listed. Additional information is available on our website.
Parents who previously borrowed through the Federal PLUS Loan Program with an AES lender and wish to reapply must complete the Federal PLUS pre-approval process at the AES Website.
NEW FOR 2008-2009
Grace Period and Deferment for Parent PLUS Borrowers
Beginning July 1, 2008, the 'Ensuring Continued Access To Student Loans Act' allows parents to choose to defer payments on a PLUS loan until six months after the date the student ceases to be enrolled at least half time. Accruing interest could either be paid by the parent borrower monthly or quarterly, or be capitalized quarterly.
Special Provision for Parents Delinquent on Mortgage Payments
Allows lenders to consider parents eligible for PLUS loans even if, during the period January 1, 2007, through December 31, 2009, the parents are or were:
No more than 180 days delinquent on a mortgage payment on their primary residence.
No more than 180 days delinquent on any medical bill payments.
No more than 89 days delinquency on the repayment of "any other debt."