The PLUS loan is a federal loan available to parents of dependent students to help pay for the student's education expenses. To be eligible for a PLUS loan:
- a credit check on the parent's credit will be done;
- Parent cannot have adverse credit history, or must have someone else (who can pass the credit check) endorse the loan. An endorser agrees that he/she will repay the loan if the parent does not.
- the student and parent must meet the General Eligibility Requirements for federal student aid, and the student must meet the Satisfactory Academic Progress requirements;
- the student must be enrolled at least half time (6+ credits) for the semester(s) for which the loan will be disbursed; and
- the parent applying for the loan must be the student's biological or adoptive parent. A step-parent may only apply if the step-parent's information was included on the student's FAFSA.
How to apply:
- Complete the FAFSA.
- Submit any forms/documents requested by the Financial Aid Office.
- Accept/Decline financial aid offer (will be posted in the Student Center in the student's MyBC account).
- Submit the PLUS Application (available online under Forms).
- The amount being requested must be specified on the application. The parent may only borrow up to the cost of attendance (COA) minus the student's other aid for the term(s) the loan is requested.
If the loan is approved, funds will first be applied to outstanding current balances the student owes to LDS Business College. Remaining funds will be sent to the parent borrower, or if the borrower authorizes, to the student. Parent borrowers will also be required to complete the Direct PLUS Loan Master Promissory note online at studentloans.gov.
If the PLUS loan is denied, the student becomes eligible for the higher Stafford loan limits for an independent student.
Terms of the PLUS Loan
- 6.84% interest rate, which begins accruing the day the loan is disbursed.
- 4.272% origination fee
Repaying the PLUS Loan
- Repayment begins 60 days after the final disbursement of the loan.
- A servicer will be assigned the loan. The parent will contact the servicer to make interest payments, loan payments, to request deferments, forbearance, or different payment plans. The parent may check their account at www.nslds.ed.gov for the servicer's contact information.
- The parent may request to have payment deferred until after the student has ceased half time enrollment for six months. This must be requested through the loan servicer.
- A parent unable to make payments must contact the servicer to determine if they qualify for a different repayment plan, deferment, or forbearance. See below for more information regarding repayment plans, deferment, and forbearance.
- Never just stop making payments. Always contact your servicer if you are having difficulty making payments. Another option may be available to you.
- The Department of Education has provided repayment calculators which are available at studentloans.gov or by viewing other repaytment options.
Standard Repayment Plan
Under this plan, a student pays a fixed amount each month. Monthly payments are at least $50, but the minimum payment may be higher based on the total amount borrowed (view a Monthly Repayment Table). There is a 10-year limit on repayment under the Standard Repayment plan.
Example: Susan has graduated and borrowed a total of $7500 in Stafford loans with an interest rate of 6.8%. Her monthly payments under the Standard Repayment plan are approximately $86.31 for 120 months. This student will pay a total of $10,357.20 when her loans are paid in full.
Extended Repayment Plan
Under this plan, a student pays a fixed annual or a graduated repayment amount over a period of time. The maximum time period for this plan cannot exceed 25 years. To apply for this plan, a student must have over $30,000 in loans for one loan program (FFEL or Direct Loan program). This means that a borrower who has $5000 in the FFEL program (which was discontinued June 30, 2010) and $35,000 in the Direct Loan program will only be able to do the extended repayment option for the $35,000 in the Direct Loan Program.
Example: Stanley borrows $37,750 in Stafford loans under the Direct Loan program. His loans have a 6.8% interest rate. Under the standard repayment plan, his payments would be approximately $575.40. Billy cannot make this payment so he applies for the extended repayment plan through his servicer. His payments are now a fixed $347.04 a month for 300 months. However, under the plan, he will pay significantly more in interest. His total payments will be $104,112 if he only pays the minimum payment for the full 300 months.
Graduated Repayment Plan
Under this plan, the payments start low and are increased every two years. The payment period is ten years. This plan is for students who expect their income to increase steadily over the payment period. For more information and to calculate repayment amounts go to the Department of Education's Repayment Plans and Calculators at studentloans.gov.
Income Based Repayment (IBR)
Under this plan, a student can set up a plan with the servicer which should be affordable based on the income and family size. Students should qualify if the repayment amount calculated is less than the monthly amount for the Standard Repayment plan. Please check out more information and access to the IBR calculator at studentaid.ed.gov.
Income Contingent Repayment (ICR)
The ICR plan is only available to Direct Loan borrowers. Monthly payments are recalculated annually using the student's AGI, spouse's income (if married), family size, and the total amount in Direct Loans. For more information and for ICR calculator, visit studentloans.gov or viewing other repaytment options.
Deferments and Forbearance
If you are having trouble making your payments it is important that you contact the agency servicing your loan immediately. You may qualify for a deferment, forbearance, or another plan to help you make your payments.
Deferment is a temporary suspension of loan payments. Payments are not required for loans in deferment status, but interest still accrues on unsubsidized Stafford and PLUS loans. Forbearance is a temporary postponement or reduction of payments for a period of time due to economic hardship. More information is available online at studentloans.gov or by viewing other repaytment options.