Federal PLUS Loan - FAQs

Frequently Asked Questions

Available to parents of dependent undergraduate students, the PLUS loan is a smart educational financing solution. You may qualify for a PLUS loan even if your financial assets limit your eligibility for other loans. And, you can borrow for each dependent undergraduate student who is enrolled at least half time at an eligible two-or four-year accredited college, university or proprietary school.

Effective July 1, 2006, PLUS loans are also available to eligible graduate and professional students. For more information on the Grad PLUS program, click here.

Funded by private lenders, guaranteed by the federal government and administered by the college or university your child attends, the PLUS loan is one of the most competitive student loan products currently offered to finance an undergraduate college education.

You can borrow up to the entire cost of your dependent's undergraduate education (minus other aid).

A PLUS loan fills in the gap when it comes to tuition costs, allowing you to borrow up to the full cost of your child's education (minus other aid). Cost of attendance includes:

Once eligibility has been established, borrowers need to meet basic credit criteria. Specifically, a PLUS loan applicant is not eligible for a PLUS loan if he or she is determined to have an adverse credit history according to criteria in federal regulations. At the lender's option, a prospective PLUS borrower may obtain a creditworthy endorser if the borrower is otherwise unable to establish creditworthiness.

A PLUS loan applicant is considered to have adverse credit if any of the following conditions apply:

Borrowers are responsible for up to a 1.00% default fee and a 3.00% origination fee, which is forwarded to the U.S. Department of Education. These fees are deducted proportionately from the loan proceeds. The guarantor may elect to pay all or a portion of the default fee on behalf of the borrower.*

Below is a list of eligibility requirements associated with the applicant for the PLUS product:

Below is a list of Eligibility Requirements for the Dependent Undergraduate student:

Note: All PLUS loans require the school to certify the student's cost of attendance.

When it comes to your child's college funding needs, you can't afford to wait. Chase has streamlined the loan process so you can get the money you need as quickly as possible.

We offer you two easy ways to apply for our Parent PLUS loan program for the
2009-2010 academic year!

Here's how the loan process works:

The statutory interest rate of a Parent PLUS loan disbursed on or after July 1, 2006, is fixed at 8.50%.

Parent PLUS loans disbursed between July 1, 1998, and June 30, 2006, are variable rate loans that adjust annually on July 1 and are capped at a 9.00% interest rate.

Effective July 1, 2009, through June 30, 2010, the variable interest rate for all loan periods, including repayment, forbearance and deferment is 3.28%

For Federal PLUS Loans Chase offers a 0.25% interest rate reduction for having monthly payments automatically deducted from your bank account (ACH) by Chase.*

The repayment period on a PLUS loan begins on the date of the last disbursement made on the loan; interest accrues from the date of the first disbursement on the loan. The first payment on a Parent PLUS loan is due within 60 days of full disbursement unless the parent agrees to delay repayment until after the dependent student's grace period. You have up to 10 years (excluding periods of authorized deferment or forbearance) to repay a PLUS loan. You may prepay all or any portion of your loan at any time without penalty. Prepayment is encouraged as it can significantly reduce the total amount of interest paid over the life of the loan.

Generally, you have up to 10 years to repay a PLUS loan (excluding periods of authorized deferment and forbearance). Lengthening the term will significantly reduce your monthly payment, although you should note that an extended repayment term will increase the total amount of interest you will pay on your loan. However, since there are no prepayment penalties under this program, you can reduce your interest costs by increasing the amount you pay each month or by paying off your loan early without penalty or fee.

Once the payment due date is established, it cannot be changed. However, you have the option to make a payment at any time before the due date.

You may prepay all or any portion of your loan at any time without penalty. Prepayment is encouraged as it can significantly reduce the total amount of interest paid over the life of the loan.

No. You can repay your PLUS loan early without a penalty or fee.

Yes. Your PLUS loan is authorized in Part B of Title IV of the Higher Education Act of 1965, as amended (the "FFELP" program). Under the PLUS loan program, you can obtain low-cost student loans to help pay for the cost of higher education. The PLUS loan is made to parents of eligible students or to graduate students by lenders. The lender cannot require you to provide collateral for the loan. To protect the lender from loss in the event of the borrower's death, disability, bankruptcy, or default, the loan is guaranteed by a guarantor. In certain circumstances, the lender also is protected if the student attends a school that closes or if the school falsely certifies the borrower's loan. Guarantors are reinsured by the U.S. Department of Education for all or part of the amount of the default claims it pays to lenders.

HOPE and Lifetime Learning Tax Credits
These programs reduce the amount of your federal taxes based on qualifying "out-of-pocket" educational expenses paid for yourself, your spouse or your dependent child. Only one of these tax credits may be claimed per tax year.

HOPE Tax Credit
With this tax credit, you can receive up to $1,650 per eligible student for a taxpayer paying education-related expenses during a student's first two years of college. This represents 100% of the first $1,100 of your out-of-pocket educational expenses for each student, plus 50% of the next $1,100.

Lifetime Learning Tax Credit:
With this credit, you can claim a maximum credit of up to $2,000 (20% of the first $10,000). This credit is calculated per family, not per student.

Because tax credits and deductions phase out at certain income levels, we encourage you to consult with your tax advisor and review IRS Publication 970, or call the IRS information line at 1-800-829-1040 to determine your eligibility and learn how these benefits apply to your specific situation.

New changes in the tax code may offer favorable tax advantages when you finance your child's education with a PLUS loan.¹ There is now an unlimited timeframe for student loan interest deductions - depending on your income you may be entitled to deduct interest regardless of the age of your loan. In addition, eligibility requirements are more flexible, so deductions are available to a wider group of taxpayers. We encourage you to learn more about the potential tax benefits.

¹ Tax information is provided as a general overview. Chase is not engaged in rendering legal, accounting, tax, or other professional advice services, and we are not qualified (nor is it our intent) to provide individual tax advice. To determine your eligibility and learn how these benefits apply to your specific situation, we encourage you to consult with your tax advisor and review IRS Publication 970, or call the IRS information line at 1-800-829-1040 for details.

You can apply now, or call the toll-free number above to apply for a Federal PLUS loan.

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